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On this edition of Carolina Business Review, Anna Beavon Gravely from Restless Politico, Matt Martin of the Federal Reserve Bank of Richmond and Carl Blackstone of the greater Columbia Chamber of Commerce.

(upbeat rock music) Hello.

Welcome to our program.

Happy summer.

Grant season.

We got we got it going on.

And everybody smile.

And there's a day where there's a summer vibe going on, right?

For sure.

Vacation.

Thank you all for coming.

Carl, I'm going to start with you, okay?

And even though this announcement was in North Carolina, it does highlight the idea that economic development still has the wind at its back, no doubt.

It's a it's like a prehistoric stone rolling down hill.

Amazon announced a $10 billion project now in North Carolina.

It's 500 jobs.

It's not a tremendous amount of jobs, but I mean it that highlights the Apple, the the the Boeing, the Scout motors, etc., etc..

These these mega elephant projects are are there more to come?

I think on the data side, yes.

Whether or not with all the things going on in DC right now, I'm not sure.

I know they're trying to get more on shoring, but I don't know if we're going to see the big manufacturing right now.

I think that, but I think the data centers, there's still opportunity there.

We see Charlotte, obviously Raleigh, the triangle got the big one this week.

Spartanburg got one a couple months ago.

Meta's building one right south of Columbia.

Data centers.

And the need for with the with the explosion of AI, you've got to have the the back end of that and those with the data centers.

And so I think we're in a prime spot for that.

Does this policy support economic development incentives when you've got so many Windsors.

Exactly.

Is that what governors point to and say this is because we have good, incentives.

Incentives definitely get top line, top billing for basically anything they can.

Incentives are sort of the concept of incentives.

It's sort of like the Kraken coming up and going to swallow anything that is around it.

They're going to look for that win.

Elected officials, no matter what level, want to win.

And when you have big companies come in, whether they're creating five jobs or 5000 jobs, the name is what matters most.

I would argue that we should probably look at like the number of businesses that get started and that can thrive in a place instead of giving credit to the big name with with a small number of jobs.

Yeah.

Matt.

Doctor Martin, our central banker here to do the numbers work, does the finance work on on that kind of a big announcement.

So I think the point that the overall picture that you might want to take a look at that, but I think it matters for communities like Richland County.

Haven't spent a lot of time in.

Richland County, North Carolina or South Carolina, which has some winds to.

It is.

Yeah.

I mean, where this Amazon facility is going, I think the county population is 41,000.

There's probably no more than 20,000 jobs in the county.

So 500 decent paying jobs matter for that county.

And I've been to some of these counties recently adjacent, where they still talk about the impacts of NAFTA, where NAFTA took away several large factories and they've never recovered from that.

So they're I think the distribution of where these goes matters quite a bit.

I agree that it places like Georgetown County and Georgetown, when there was a final closing of a mill in January and it kind of got lost in the mix that places like that are looking to restart.

And I'm sure they will.

But rural, I mean, this goes back to the the political fights are happening.

The policy issues at the state House today seem to be more divided between rural and urban, and this is the same on the economic development side.

These rural counties truly need the economic development.

And so a data center in a rural county could be a huge win for them.

I think where they go is is important.

Do they get the same type of incentives?

That's a good policy question for our legislature to discuss.

Because they do.

There's such a enormous amount of impact on the front end capital cost, but very low on the labor.

Side and above.

And so is are the political are the lines being drawn along rural and urban instead of politics as they bend?

Well, is it the same?

I I'm going to say it goes down to the issue, which is like the most political answer ever.

But to your point about the rural communities really needing economic development?

Totally.

Everyone agrees with that.

Rural, it matters so much, for smaller counties, the number of jobs that are created, also the income level of those jobs and where they're hired, because it has a ripple effect around the community.

They'll go to the local coffee shop, they'll shop at the at the little bakery.

All of those things are true because that's human behavior.

However, we're seeing that incentives don't necessarily go to rural counties, which is where everyone agrees.

We agree that rural counties should have incentives.

But you see, like the triangle, Raleigh, Durham, triangle area getting a lot, Charlotte getting a lot.

And so they end up swallowing up a lot of these really big incentive wins that elected officials and specifically governor's offices claim as, as big wins or as credit or like, hey, this thing works that some people are skeptical about.

But it's not going to the rural communities that need it the most.

Yeah.

Speaking of jobs, at the taping of this program at least, Matt, we've got we got another jobs number.

We got a revision from a previous.

Unpack that a little bit for us.

Yeah, the, the the jobs number for May was decent, roughly 140,000, but there were significant 90,000 plus revisions from the months before.

Meaning what exactly.

Meaning they get more information, they get more solid data, and they have to go back and say, you know, we thought we had this number of jobs.

We're going to revise it down.

Usually it's the latter part of the month.

They fill that in.

But it's gone down after the.

Revision.

It's gone down the previous months went down after the business.

So the net gain this month was maybe about 50,000 and but I think that's probably reflective of what I'm hearing on the ground.

Right.

So we're in this low, high or low fire environment.

Right.

A lot of firms post-Covid raise to get up to speed.

A lot of them are much more comfortable with where their workforce is.

They're sort of filling in nooks and crannies.

But they're not they're not in any mood to, to really hire.

So they might have some hiring freezes being, conscious a headcount because of the uncertainty that the part in the policy environment.

Right.

Particularly if you're tariff exposed, you're going to you're going to be careful about your expenditures.

I don't hear much about layoffs yet.

I think a lot of firms have plans that if they need to, but their baseline is we think the tariff thing will settle down in the back half of the year and we think we'll be okay.

So we're going to hold on to our staff.

Is your gut there going to be layoffs?

I think there are a lot of folks are hedging bets right now.

If they have an opening, they're keeping it open.

They're not hiring.

With the thought that we're going to see where the how this plays out.

I mean, the uncertainty we had this last year, right, with the election.

There was a lot of uncertainty around the election.

Now we're back to this level of uncertainty, which is not good for the markets, but it is from a hiring.

They're saying, well, we're just we're doing okay right now.

We're just going to hold off and let's it's a seasonal job that you got to have somebody.

But the most part my our, our members are saying we're just going to wait and see.

Okay.

You know, a final word since we're talking about talent and jobs, talent and jobs as you well known in Bevins.

So you got talent, you got energy.

Both of those elements are needed for economic development.

In North Carolina, former Commerce Secretary Michelle Baker Saunders.

I get that right.

Michelle Saunders.

I'm sorry, I should know that.

That's terrible.

But, she, along with, current secretary Lily, both said.

And Harry Lighty and South Carolina commerce secretary both say that we've got an energy crisis.

Now, they they've been saying that.

I'm saying it that way because that there's not enough energy to provide for economic development announcements like huge data centers like Amazon just announced how where where do we hit the tipping point on it?

Gosh, I if I knew that I would be a Brazilian air, or a magician.

However, I think that we there are a lot of situations that are at a crisis level.

When we look at infrastructure, energy, I think no issue exists in a vacuum.

And I've said that before, I feel like that's that's something that I get to say a lot on this show as, as somebody who is represents all political views at this point.

Look at your t shirt that says.

That would be really great.

Yeah, I love that.

But no issue exists in a vacuum.

And energy and infrastructure and even education and, and economic development, all of those are feeding into each other.

And so if, if we're in one crisis, one issue has a crisis, the other one is there too, and it's a it's a matter of, what is going to look good to pass immediately, to go after immediately.

And then how feasible is it to get it done in a short period of time.

Energy distribution and development?

Is that going to be a crisis?

I mean, here he lights, he said it's a crisis.

Huge.

And so we just passed an energy bill in South Carolina.

The governor decided General Assembly.

That was their number one priority for the beginning of the session.

It does allow a couple things.

One, they're building new capacity, new generation down, low country.

Santee Cooper is it also allows it it gives some certainty in the regulatory process that they're going down this path, that they can get to finish product sooner.

So that that's good.

We are at a, a crisis situation, both in new energy.

Baseload energy, because the number of people that moved in number data centers, the number of, of new manufacturing that we have, we have just not kept up in South Carolina.

So we need it, but we also need natural gas as well.

We've got to increase in pipelines.

And, we need new distribution lines.

Is there is there any that Jimmy Stanton from Santee Cooper was on the program a few months ago talking about that they're they're getting bids.

Santee Cooper is getting bids to restart the VC summer plants that were mothballed for a lot of reasons we're not going to get into.

But to restart those nukes is not an inexpensive proposition, is it?

Losing momentum because he was sounding pretty open about it?

And wouldn't a nuke fill a huge gap?

Oh, it would be tremendous.

And in this case there were two one that was 40% complete and one was 25% complete.

So get those up to fully operational would be huge.

It is a, the cost of natural gas now is so inexpensive.

So building a natural gas plant combined with some batteries would be cheaper than building the nuke.

But for future baseload need, nuclear will be phenomenal.

The success that they've had in beginning of these conversations, I think 84 companies expressed some interest there.

A bunch of India's 60 odd number companies have signed NDA, supposedly, to continue the conversation of starting those nukes again.

But, we'll have to see how it balances out on a balance sheet.

That's going to be the question mark.

We don't really know what the the total cost will be to bring those back online.

Met your board for the Federal Reserve in the Carolinas comprises a lot of people in a lot of industries.

What do you hear about the energy challenges?

Similar to what my fellow panelists have talked about?

I think this is solvable, right?

I mean, we're talking about regulatory and administrative processes and the trade offs involved.

Right?

You want to have safety, you want to have all those things.

But are you overburdening the process when you when you need the energy, right.

And having sort of a robust base of different sources of energy?

The natural gas thing is, is interesting.

And that goes back to the shale revolution.

Right.

And since then I can remember when natural gas was, over $10.

Right.

And we were all screaming about that.

It's abundant and it's cheap.

So maybe that's the near term solution.

But I think the time has come to think about those trade offs and the regulatory side, because we can fix it.

We can we can develop more.

Energy is the appetite for for public policy.

Those that make public policy, like leadership in North Carolina for alternate means of energy, is that waning quite a bit or there's going away.

Would they like to kind of wipe off any incentives for wind or solar and let them develop naturally if they do, but not subsidize that any longer?

No.

I say there's incentives still pretty are still holding pretty strong their lobbying, presence of the General Assembly for alternative energy is is is very deep.

Their bench is deep.

Specifically when it comes to, to solar energy.

However, the desire to, to, to fix a crisis certainly exists, without a doubt.

And we've got Duke Energy working on some, some stuff.

They're a powerhouse in North Carolina.

And they every year they bring forward legislation.

And this year they're, they're moving through some, some pretty aggressive legislation.

But go ahead.

Well, I'm.

Actually just curious for both of you if, if the first time one of the either North Carolina, South Carolina loses an economic development project and they say you don't have the energy to support it, does that spark a response?

Oh, yeah.

Has that come up?

Has that come up to say, you know, you know, we're worried about your energy.

Delivery in parts of our state?

Yes.

It's an issue.

And they're not going to talk about it publicly right now.

Publicly.

But but that is an issue.

Are they whistling past the graveyard about something like this?

Is that too dramatic?

I think there are some companies that use a tremendous amount of energy, and we've had to pass on bidding for those projects.

Knowing that they they just wouldn't make the shortlist.

Right.

Okay.

All right.

Did you have something?

No, I, I don't know.

No.

That's a great that's a great question.

I don't I'm not privy to those conversations.

But what we're talking about is two different.

I mean, the solar and the wind are not baseload.

And so we I mean, they cannot do what we need.

They're great to subsidize what you already have, but the cost is inefficient as it relates to baseload.

So we really have got to cut it down and say what do we have to have?

What do we need over the next 10 to 20 years?

Our population, both states have just grown exponentially.

So that's why we need this new baseload.

Plus, the manufacturing will subsidize whatever we can with the energy sources of sun and wind.

The additional question that I have is so if we look at you mentioned earlier, like the the reliance on AI and how that's growing and how that is, it's really permeating all of our lives, I've never had more conversations with ChatGPT than I have in the last like three months.

And, and so when you have other states looking at, Bitcoin Reserve for their state, bitcoin is you have to mine Bitcoin.

That's a lot of energy.

Right.

And so when you have like they're looking at it as a.

As an industry to to develop.

Well I would say that that might be aggressive terms.

Yeah.

But they're looking at creating like state reserves with Bitcoin because it is the hardest money we have.

And so as like it's sweeping across the country, this conversation about like hey let's get involved in Bitcoin I know this is totally not where you want to do.

It but it's a good point.

Yeah you're right I don't want to go too far down.

But but Matt so the fed you're looking at me because we had these conversations.

Is the fed ever going to.

It's sanctions.

Probably too strong.

But maybe sanction or bless some cyber.

Well that's not or that's a different regulatory regime.

What we have said is for now we're not interested in a central bank digital currency.

So we're not going to put one out ourselves anytime in the near future.

That may change down the road based on analysis.

The shorthand that I'd put on this in my own words is we already have a digital dollar, right?

All of us have digital dollars in our bank accounts.

There's really not a use case need that's really screaming.

So that's the inference of a central banker saying, what would you need a Bitcoin?

Why do you need to do a transaction that's not seen by other people.

And there may be use cases there.

And the thing we'll have to pay attention to, it's another payment channel.

Does it have any implications for our payments systems.

And equally important for the transmission of monetary policy?

Those are the things we'll have to think about.

Yeah, of course it's it's a much bigger dialog.

But thanks for bringing it up I'm sorry.

Millennial lineal here.

It's good.

We need that.

We've got a few minutes left, but I want to zoom back out and talk about state budgets for a second.

South Carolina completed their budget.

It seems like a lot of smiles all the way around the state House.

The governor was.

Everybody.

Was there a bunch of wins on top of the fact.

And I was a little surprised that there is $1 billion surplus again, right.

Combination of one time moneys and recurring dollars.

So revenues were continuing to be up.

So total of, of $1 billion.

With tax cuts.

With, with that.

Small.

Cut in income tax.

And a larger conversation coming next year on income taxes, the House did pass a larger bill to lower the income tax, well down to be more competitive.

In the southeast.

The Senate did not take that up.

So they'll take that up and when they come back in January, but, the money's been flowing in again.

I think that's just the if you continue to look at the number of people moving to the state, In migration, in migration, bailing out.

That's right.

Maybe decisions we might regret later.

So North Carolina, not quite the rosy scenario that maybe a budget shortfall.

Well, our budget scenario is very rarely rosy.

We have a lot of, it's always down to the wire between the House and the Senate.

Do you think there will be a budget shortfall or do you think there will be a budget surplus?

I think we're going to have a surplus.

Really?

Yeah, I do, I think we'll have a surplus.

As that number.

Start with a B.

No, no.

And it's going to be it'll be small.

But like I'm not claiming that we're going to like really wave the flag on that.

But I do think that, the main sticking point in between the House and the Senate in North Carolina is what to do about taxes.

Okay.

Five minutes left.

So, we could go down that, I want to expand a little bit on transportation infrastructure because it's another one of those very important things that we need for an economy to be healthy.

And certainly that is the case in North and South Carolina.

And, and I'm going to I'm going to stay with you on this because you were you were late to our taping.

I was because you got caught in traffic, which it happens.

We've all done it.

And and when I asked you what part of I-85 it caught on, you said at the beginning and at the end, which is the entire between Raleigh and Charlotte.

Yeah, I know we're kidding about this, but we're kind of not kidding about this, are we?

Are we getting to the point now where we are choking more so every day, all the time on our traffic and infrastructure?

And here's a compound question.

And with all of these economic development announcements will so economic development is needing transportation to happen.

But will the revenue from economic development bail out the cost for transportation?

No.

Fast answer.

No, no.

Short answer.

We want to think.

About that before you.

Know, I said I just I just spent a longer, Yeah.

I don't think it's going to bail it out by any means.

I think that that, incentive money that comes, incentive money indirectly coming from corporations coming into an area, putting increased pressure on, on roads and, and traffic of people who live there normally.

That money's already sort of earmarked in people's minds toward local economy growth because that was the reason for doing it.

It wasn't, hey, we've got some traffic problems.

Let's bring in Apple.

To help.

Us.

Their money will help us solve this problem that nobody wants to talk about.

Right.

Well, except the Scout situation, when they announced the Scout part of the incentive package, including a new overpass and a, rail lines and all that.

That was paid for by Scout.

There's people in the state that was part of the incentive package.

Was included was to create a new exit.

Well, the revenue from Scout.

That was not.

That was a part of the expense, of the state, part of the enhanced, package.

But will that whole.

Sort of sweeten the pot?

Correct.

But we have to start thinking about, yeah, impact of all these things and do it on the front end, because it will never pay for it on the back end.

Yes.

That's all goes to schools, all the local governments.

She's she's 100% right on that.

Yeah.

Matt does the math work for transportation and infrastructure beyond what we're talking about now?

Yeah.

My my bumper stickers, particularly within the metro area, transportation is what you talk about when you mess up housing policy.

So we need more housing and we need where the jobs are.

That's the hope.

Guys.

With current and future, congestion, that sort of thing.

Right.

So if the only affordable housing for a family is 30 miles outside of town, you put that that household on the road to work for a lot longer miles.

But not to be devil's advocate, but if you have a high speed rail or some type of light rail going out that corridor, doesn't that make housing all of a sudden affordable 30 miles outside?

It does.

And, you know, Charlotte's got some of that, but not you know, there aren't I think Charlotte's the only metropolitan area in the two state region for that.

That.

Yeah.

Where are you going to say something.

I was just say Matt needs a t shirt.

Yeah.

No issue exists in a vacuum.

So when we when you make that run, make sure in Cleveland for that.

And so this final thing we do have to wrap it up.

When you think about Scout being developed along the I-77, you know, not just corridor, but absolutely corridor and Blythe would North Columbia, I mean, that's that's going to be a lot of congestion.

A lot of congestion, which it it created that opportunity to build a new interchange exit for just for Scout.

But it.

Doesn't increase the size of the interstate between Charlotte and.

Columbia.

No.

And they're not they just awarded the Dot in South Carolina award, their largest contract ever this week.

And that was to, to widen 95 from Savannah up towards, Hilton Head.

But warning is that been coming 20.

Plus plus plus.

Absolutely.

So we were so far behind and and so there is a there'll be a big push this year real quickly to do it.

Dot modernization plan, through the General Assembly next year.

Where do we need to be.

Yeah okay.

That's the last word.

Thank you.

Really last word is does the fed allow facial hair?

No.

Nobody's giving me grief about it.

Tom Barkin is going to be on.

You know, I'm gonna have to, And I'm kidding.

Thanks, Matt, for being out here and above.

And I'm sorry you got stuck in traffic, but we always appreciate you have perseverance.

Yeah.

Yeah.

Okay.

Thanks, Carl.

That's a good seating.

Thank you all.

Until next week, I'm Chris.

What do you mean?

Here we are in the summer.

We certainly hope that you're going to have a good summer, full of good family stuff.

Because we do live in a wonderful place.

Until next week, I'm Chris William.

Hope all your business is good.

Goodnight.

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