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On this edition of "Carolina Business Review," a panel discussion featuring Dr.

Monique Perry-Graves from Road to Hire, Jason Thomas of SC Biz News, Tony Mecia from The Charlotte Ledger, and Matt Martin of the Federal Reserve Bank of Richmond.

(dramatic music) - Hello, welcome to our program.

It's not too early to say happy holidays, so happy holidays.

- Thank you, sir.

- Good to see y'all.

Jason, let's start with you.

South Carolina and North Carolina are two distinctive, different states, obviously cousins and siblings to some degree, but clearly different in color when it comes to political persuasion.

- Right.

- There were hundreds of seats up for grabs.

Some turned over, some didn't.

But was there a meaningful change in political leadership when it comes to business and industry?

- I don't think so.

I think South Carolina's gonna stay as red as it can pretty much be.

You know, but I live in Greenville and we did see a Democrat beat a republican on the city council seat.

So, you know, we have so many people moving into Greenville from the Northeast and even California.

So, I think there's some blue creeping in.

But, you know, when you think bigger with the economy, you think, one thing that comes to my mind is the tariffs.

You know, it's changing pretty much week to week what's gonna happen there.

And you look at what's happening on the economic scene with AESC a battery, EV battery manufacturer, they've suspended their operations, $1.2 billion plant in Florence.

But then on the other side of that, you got Century Aluminum, they're restarting an aluminum smelter.

They're investing $50 million in that.

And they're saying the tariffs are the reason they're restarting that.

So, we'll see how, from a national scale, how tariffs like that might have an impact on the politics moving forward.

- Okay, thank you.

Tony, you're in the biggest metro and the biggest urban core in the Carolinas, of course the Charlotte region.

Any, you know, the Republicans have just lost a whole bunch of ground and are down to one on the city council, none on county commission.

Is that a meaningful change for business or commercial activity?

- I don't think it's any seismic change.

I mean, there were some adjustments a little bit.

It had been nine to two Democrats on the Charlotte City Council, now it's gonna be 10 to one, but the leadership in Charlotte is still pretty tied into the business community.

There have been some noises about, some questions about, oh, are we doing things too much in favor of business?

But I don't think they have a majority.

And I think it's still pretty a business friendly city.

- Yeah, okay.

All right, Monique, your point of view.

I mean, you know what's going on in Carolinas, what do you think?

(Monique laughing) - Well, my point of view is definitely not on one political side or the other, but we are about mostly education and workforce.

And so we think about folks that are voted into office, we want folks that are aligned with making sure we have thriving economy across both states.

- Are they gonna address it?

Do you feel like there's more sensitivity to those issues?

- I do, I think if you think about Charlotte acutely, we have organizations like the Charlotte Executive Leadership Council, where you have top CEOs that are working lockstep with our superintendent and just really addressing those issues.

Even the organization I represent is a combination of education and workforce but is born out of a corporation.

So, I think we have to, we can't have a thriving economy without skilled workers.

- Which takes us to jobs.

Matthew, Dr.

Martin, you are the economic scientist on this panel.

You have used the term, many have used the term about no hire, no fire when we talk about jobs.

CNBC reported, and I know I said this to you right before airtime, that we have experienced the worst layoffs in 22 years, in a month, October was that.

How does that square with no hire, no fire?

- So, that was a private sector report, the Challenger Gray report, and it was focused on a couple of industries, right?

We heard the Amazon layoff announcement.

So, tech was one of those industries where they're going through a layoff cycle.

And that might be partly AI driven, right?

I think significantly it's just big companies trying to contain costs and keep profit margins.

So, I think it is, I think we're still low hire, low fire.

You're always gonna have some way off activity.

It's a dynamic market, the labor market.

And I just note regionally we're not seeing that, right?

It's still, particularly in the urban areas in the Carolinas, it's still fire, Or I'm sorry, higher.

(all laughing) I don't wanna get that back.

- You can't pull that back.

- You know, we're now a couple months data missing at the, from the federal government.

But as of the last three, South Carolina was the fastest employment growing state in the country easily.

- Really?

- Yes.

And North Carolina was among the top 10, I think.

- Monique, I wanna come back to you because, I mean you're squarely in this space between the educational output of talent, the gap.

- Yeah.

- You know, all these huge major economic development announcements, and you've got this kind of, this attenuation of folks getting into the workforce.

I mean, is this a lot of, I don't wanna say it this way 'cause it makes it a little bit flippant, but is this a lot to say about nothing when there's a fear of AI, or is there something else going on here out of the glare of AI and finding the talent?

- Yeah, I think one of my colleagues said recently, AI was kinda like when the internet came, like it's here, you're gonna have to embrace it and to what degree you embrace it and use it, there's a lot of fear around AI replacing jobs versus AI making jobs more efficient.

And then AI is its own jab category itself.

If you think about AI, one of the things we think about is think about AI, like the way you do Microsoft Outlook.

We all at some point had to have a basic toolkit around AI and around Microsoft Outlook.

And so AI is the same thing.

But then you think about jobs that are born from AI, like a AI prompt engineer.

How can you ask the right questions to get the right output to optimize?

And so I think that AI actually is opening up another industry of jobs, but we'll make our work more efficient.

- Chris, I can piggyback on that (cross talk) yeah, please.

So, yeah, yesterday we wrapped up our manufacturing conference, annual manufacturing conference, and I talked to our advisory board members as I planned this conference.

And that the number one concern, any manufacturer you talk to is filling those technical skills jobs.

That technical skills gap, you alluded to.

By 2030 there's gonna be 2 million open technical skill jobs and there are already hundreds of thousands of those now.

So, how do we fill those, right?

- Yes.

- Technical schools is playing a big role in that.

South Carolina is putting a lot of initiatives in that, but it's still a massive problem.

And technical skills is gonna, or the technical schools are gonna help, but it's still gonna be a really big challenge to fill those positions.

- And another thing is that we've got to expose our students that are in K-12 to these careers that were not in place when we went to school.

- So, public schools not doing that?

- They are doing that, but we've gotta do that even more.

And we've gotta make sure that our educators are exposed to it, therefore they can expose our kids to it.

And so if you think about, I used to work over the border at York Technical College.

So, you think about the community college system, technical college system, and our particular nonprofit, we're exposing kids to those careers in K-12 so that they can come out wanting and seeking that training.

But there's a lot of careers that are on the table now that weren't on the table two or three, four years ago.

- My 9-year-old wants a robot, should I- - Yeah, there you go.

There you go for Christmas.

(all laughing) - If I can add to that, I like the compare.

I agree with everything that was said.

I like the comparison to when the internet came out.

- Yes.

- The one difference though, is we were sort of in a demographic phase where labor was relatively abundant when the internet came out.

- Good point, yeah.

- Now, we're in a phase where the demographics are different.

- Yeah.

- And I think employers are worried because they can see the demographics and know that labor's gonna be scarce.

In some sense, we need labor-saving technology because we're gonna have much slower labor force- - It's already scarce, right?

- It's scarce, yeah.

And, you know, at least for some period of time, you've got less immigration.

You've got baby boomers retiring in bigger numbers now.

So, labor force growth is much slower.

- How does this wash over you, Tony, this known unknown of AI, whatever it is 'cause it's so ubiquitous, but yet it's so unknown, but yet as the panelists have already talked about, the huge gap that's prevalent right now?

- It's just moving so fast.

I mean, you know, you think of what the hot technology jobs were 10 years ago and everybody was saying, oh, get into coding, get into, well, now guess what?

AI can do all the coding.

So, all the people that trained on coding, you know, now I have to learn to tell how the AI how to code.

So, it's really rapidly moving.

I talked to some people at UNC Charlotte recently, and they're really gearing up to try to train, you know, this younger generation started an AI major.

You see a lot of universities doing this sort of getting ready for that next step and being the people, having humans that are in charge of this technology rather than the other way around.

- The next step out from jobs and people in jobs looking for jobs and looking to hire jobs is a housing gap and a housing crisis is, it's been called a crisis.

Any thoughts about housing at this point?

- Yeah, broadly the housing affordability problem, which we heard about with the elections this week, right?

Affordability is an issue, it's a housing supply problem.

We've gotta figure out how to build more housing.

Was having conversation earlier this week with someone, we were talking about the first houses we bought, ours back in the early, right around 2000.

It was a 1,300-square-foot home, but we had three bedrooms, we had a child in that home.

Nobody's building that product now.

And it's also more difficult to sort of get the land developed go through that whole process.

There's a lot of obstacles that weren't there.

So, I think there are things that can be done to keep affordability better, but we're not really trying them.

- Yeah, affordability, you hit the nail on the head.

It's a key issue, you know, and it's not just the first time home buyers, it is people like me.

I've owned homes, several homes, but when I moved to Greenville, I had a three-month plan, like, we're gonna take three months, we're gonna find a house, we'll be set.

I'm still renting, you know?

And you look at Charleston, it is a straight crisis, affordable housing.

You know, I was having dinner and I was talking to the bartender and he was talking about cost of living and he said he couldn't afford to live in Charleston.

And that is having a bigger effect on businesses- - And that's not anecdotal- - No, that is a real (crosstalk) yeah, yeah.

And he's like, Charleston is becoming so expensive.

They're pricing themselves out of these workers to be able to fill those positions.

- Well, it is interesting if you look at, you know, within those markets, certainly those prices are going up.

But, you know, if you look compared to other areas of the country, people still see this area in the Carolinas is very- - [Monique] It's all relative.

It's all relative.

(crosstalk) (all laughing) - So, Monique, I mean, your thoughts on it.

- Yeah, I think it's also acute, you mentioned the person that mentioned about their commute to their job, you think about our educators.

If you think about our teachers that might work at a school, and then you've gotta get up extra hour early to get to that school by 7:00 or 6:30.

- Well, you know, we've talked about these same issues and I'm not being pessimistic and I'm not being cynical.

I'm not almost being skeptical, I'm trying to figure out then, what is the answer?

Because five years ago we had the same conversation.

10 years ago we had the same conversation.

There was a talent gap.

How were we gonna fill at the time.

Apple's building.

This structure's going in RTP, oh, my gosh, how are we gonna fill it?

And we're having those same conversations.

Is it just more acute?

- I don't know if it's more acute.

These are the issues that come with pretty rapid growth- - Yeah- - Right?

So, we're- - You class problem?

- Yeah, kind of.

And to be fair, I think both Carolinas are better than most states at actually building housing.

- Yeah, and I would say just in the three years I've been here, I've definitely seen some more collaboration taking place where people are definitely seeing that this is a problem.

And even Charleston, they're taking steps to really address this.

You know, for the first time the mayor gave Downtown workers a break on parking because they know this is a problem.

But you know, they also don't wanna stop all the tourism coming in, which is, you know, driving a lot of this economic activity.

So, it's a really fine dance that they have to.

- Does transportation fix a lot of that?

Transportation- - Maybe in Charlotte, but yeah, in places like Charleston, you know, they've been talking about a rapid bus system for years and they're finally starting to plan it and it's actually gonna happen, but it's just a tiny segment, you know, and so it's gonna help, but it's a whole bigger issue that they need to plan for that's gonna be there.

- So, as you alluded to Charlotte, Charlotte, just in the last election voted $20 billion or so to a transportation plan transit plan with a 26 member committee or a large, probably committee is an understatement that oversees all of this.

Tony, is this plan a big step to fix it or is there some, you know, because the vote to do it was a lot closer than many people think?

- Right, it was a 52 in favor, 52% in favor, 48 opposed.

It was a little closer than some people thought.

Is this gonna fix traffic?

I don't think anybody is saying it's gonna fix traffic.

And you know, if you fix it, that just encourages more people to come because it'd make it really convenient.

So, I mean, I think it's about giving people some options.

They're gonna build, it's like you said, a $25 billion plan.

If you throw in federal money, build new rail lines, add buses, expand roads, sidewalks.

But this is a 30-year project and nothing's gonna happen anytime soon.

It's gonna be years, maybe a decade before that first rail line- - At least.

- At least.

- Yeah.

- What I'd like to hear more about as they develop the use of these dollars for transportation is tying it into a housing plan.

You know, those dollars will go a lot farther if we do smart growth and put housing where jobs are sort of minimize the need to use transportation.

- You have your ear to the ground on that.

Is that what you're hearing?

- Yeah, I mean I'm hearing that.

I'm also hearing, you know, back to the school analogy about how we have parents and guardians that rely on that transportation to get to work and can't get to their kids' school for a parent-teacher conference because of what it takes in the time to catch a bus or catch the rail.

So, I think that any progress is gonna be important, but to the earlier points, it's a timeframe in which our progress can happen.

- The the other thing that came up during the elections, and this is not anything that we haven't known, but it really was an acute debate back and forth, was the cost of healthcare.

And we've seen double digits increases in healthcare in just this calendar year.

Again, this is gonna be a challenge.

Jason, did anything come outta your manufacturing conference around healthcare for rank and file for those that live, the large majority that live in that space?

- Mm, not so much outta the manufacturing commerce, but you know, we've done a lot of stories about how, you know, rural healthcare access is a really big issue, and that is on a lot of people's radar in South Carolina and some of the bigger healthcare systems are addressing that, especially up in the Upstate, Prisma just opened up a new facility that's gonna make it a lot more accessible.

So, it's definitely on people's radar, but they have a long way to go to reach everyone.

- Matt, why is healthcare going up?

What is driving it?

What's the engine of that?

- The one in our outreach to CEOs and even internally I've heard this, one of them is the GLP drugs are one factor, but it's insurance more broadly, it's beyond just healthcare.

We hear a lot about property and casualty from businesses as well.

And I think, you know, as those costs go up, firms that are tariff impact, they've gotta cover those.

And I think this is part of the reason you're starting to hear some cost-cutting measures.

The trimming of headquarters staff, like from Amazon, is they've gotta recover margins for all those costs.

- And you know, since we are in kind of an open enrollment period, you know, we had a story in The Charlotte Ledger a couple weeks ago saying that, you know, the increases in healthcare costs both for the employers and the employees are going up more this next year than in the last 15 years.

And a lot of that is driven by the GLP ones, coverage of that employers and HR experts say, as well as maybe people who are scheduling surgeries now that they had put off during COVID- - Because of the price increase coming next year?

They're trying to get in before that?

- Well the people have put off surgeries during COVID and now doing some of those elective surgery.

Then the other piece that they speculated was a part of it was, I thought this was really interesting, that AI in healthcare has improved the billing so much that they're able to actually, you know, more accurately bill you and get that money out, so- - You can't trust that for anything, can we?

Yeah.

- And that's a good thing?

- Efficiency.

(all laughing) - Maybe it's a good thing, but, you know?

- Let the AI pay our bills, how about that?

- Yeah.

- You know, and I'm not being facetious or not being sensational, but is the cost of healthcare a bubble?

And I hate to keep looking at you, Matt, but you know, statistically, I mean, you're- - Well, the demands on the system are growing, right?

This is, again, this is the demographic issue.

At some point we'll get to the other side of this, and maybe the demand pressures ease up a bit.

I'm not a health economics expert by any means, but we, you know, we've got some sort of near term issues for the next couple decades.

- Were you nodding and did you just say yeah because you agree with it or you see something different?

- No, I don't see anything different.

I think I see from my lens, I see things like you were mentioning Prisma in South Carolina, I know that advocate help is doing some work in our school systems here providing, so that if a child has an issue, we don't have to send them home and we have an absentee type thing, we can have that in the schools.

And so I think we need to tackle it from like all angles for sure.

- Yeah.

- Mm.

- Travel.

Travel is a big deal because of the shutdown.

We have some major airports, of course Charlotte, Greenville, Charleston, Raleigh-Durham et cetera, et cetera.

Do you expect this to be a drag on not just the economy and the Carolinas, but is it going to be more than a nuisance?

Anyone?

Okay, good.

(all laughing) (crosstalk) - Infer to Charlotte on that, but GSP Airport, we, you know, it is not gonna be affected by this because it's a small airport, but what we're talking about 45,000 flights across the country, it's so 10%, we're talking 4,500, Charlotte is on that list.

You know, we were just talking, it's gonna have an impact on some business travel and people leading these companies.

So, I think it's gonna make some kind of dent.

- It does look like the one, the flights that they're cutting back because of the shutdown, at least as of today as we're talking here, are mostly these regional jets, you know, flying actually like Greenville, you know, but it's really, the impact of it is really, seems like it's on the order of a storm, you know, a small storm in one part of the country, so it's not- - You know, we're still in hurricanes.

(all laughing) - Knock on wood.

- Careful, yeah- - Yeah, that's true.

- Matt, what do you think?

- You know, I think travel was off a little bit.

This is a little bit this K-shaped economy, right?

The higher income households are still traveling, lower are not.

So, you know, maybe there's a change in the type of travel if it's for leisure, you can go someplace locally where you drive, you don't have to always fly somewhere.

So, maybe that has an offsetting benefit to some degree as well.

(crosstalk) (all laughing) - Yeah, we're coming down there.

(all laughing) Coming- - There's enough cars on that road.

(all laughing) - In the last few minutes I'm gonna ask y'all to put on your business and economic hats, and you're probably gonna be the last one, but you'll probably have the most depth in this one.

The economy is we now we're crossing into the holidays, everything's gonna feel good that we're gonna be in a new year.

You expect to have a slowdown anywhere anyhow?

- Yeah.

- And I don't mean in just teaching or general assembly, can't get their act together around budgets.

I don't mean that.

- Yeah.

- In general, what are you feeling about?

What are you hearing about, Monique?

- Yeah, well, I'm only hearing anecdotally, so I'll definitely (crosstalk) defer to that.

Yes, sure, but I think that folks are taking a different look, you know, at what they're gonna spend over the next two months and really thinking about that more thoughtfully.

And I think that has a spectrum.

You've got folks that are really thinking about their basic needs and what's gonna be on the kitchen table, to others that might pull back on a extra vacation or some extra gifts for Christmas.

And then you've got folks that are in the middle.

That's what I'm hearing.

- So, there's not just spending, because we know we feeling good, there's a wealth effect and- - Yeah, I mean I think some people to what early point that are gonna take a trip that are gonna spend that are in different category might be shielded from it.

But I do think people are being thoughtful.

- Okay.

- Not a- - Is there a gap between that demographic of spending and a rank and file or more of a middle demographic?

- Well, I'm not sure about that, but when I think about, you know, business investment and what's happening in South Carolina, $8 billion worth of investment happening in South Carolina last year, you know, I don't see that slowing down- - [Chris] You know, I'm not being facetious, that sounds light for South Carolina- - No, it's pretty good.

- Even the last few years- - Yeah, well compared to national, what's happen in a lot of other parts, I think it is pretty good.

And to other points about how many people are moving to South Carolina, the fastest growing state in the country, I don't see the economy slowing down very much.

But then, you know, I talked about earlier about the tariffs and maybe some of the uncertainty happening at the White House and what might happen in the future.

You know, who knows what could happen, you know, it could have a little bit of effect on that.

But it's really interesting.

There was a study done over the past 20 years, South Carolina's manufacturing, the employment actually shrank about 26%, but the production, the GDP increased about 32%.

It kind of goes into the technology and the AI, so- - More is less- - It's, yeah, so we talk about the workforce and employment is a really interesting time, right?

Across roads to see here.

I know we have a lot of these technical jobs that are out there, but we'll see what happens as technology keeps advancing and it's just gonna be a really interesting future.

- Tony, in Charlotte, in the Charlotte region commercial core, the outer core, the suburbs have this huge infrastructure around commercial real estate that is a direct beneficiary of whatever the economy's doing.

What are you seeing, what are you hearing?

- Yeah, the last few months has been really interesting.

You know, new office leases have been traditionally the last few years kind of slower, you've seen fewer corporate relocations.

I think those are starting to pick up.

Those have picked up a lot I think in the last few months.

You know, there are a lot of people saying, when are we gonna build that next office tower?

And there's sort of maybe momentum building toward that.

But I do think, you know, to our earlier points, I do think there are a lot of people here who are hurting, you know, on the lower income side.

I mean, think utility costs are up, food costs are up, housing costs are up.

And I think you see a lot of pullback there.

But on the higher income side, I think, you know, to the points earlier, I think people are still spending, still traveling, you know, so I think there's a little bit of a divide there.

- Let me tease out just for a second the difference, especially Charlotte because it has so much Class A, and it has a lot of Class A that is vacant.

What would the unpublished whisper rate of vacancy be?

- Yeah, I mean- - In Class A?

- Yeah, I don't have it all broken down.

(all laughing) Overall office vacancy rate in the Charlotte region is around 25% or so that's still pretty, pretty high.

But the trend that you hear is that the companies when they move here, they want the Primo, you know, AA+ or whatever you call it, you know, with all the Instagram walls and cafeterias and the kombucha taps and things like that.

And that's what they're looking for.

- [Chris] Is that available?

I be looking for the- - Grass wall and all that.

Yes.

- Is that where you work?

- Now, Chris, Chris?

- No, no, we don't have that.

- In South Carolina it's a lot different.

The vacancy rate in both Greenville and Charleston is about 14%, which is about 9%, you know, lower than cross national average.

But to Tony's point, in Charleston they're leading in Class A vacancy 'cause they want those bells and whistles.

But a lot of the leasers are coming to that B and C Class because it's all about location, they have better location.

Those A's are maybe out spread out a little bit more.

But up in Greenville they're having a record year for that industrial vacancy going down 'cause a lot of the it distributional logistics taking up a lot of that space.

So, it's gonna be really interesting.

- Less than a minute.

Do you expect that there is going to be a slowdown since there hasn't been a real recession?

- Short answer is no.

And the private sector forecasters don't have that building, the last statement, economic projections from the monetary policy makers didn't indicate that either.

And when I talk to businesses, they've all done their budgeting for next year.

They're looking at demand growth.

That's okay at least and for many of them.

There are puts and takes and policy like tariffs is, has creating some winners and losers.

But the broader trend is, if maybe not spectacular, but it's pretty solid.

- And do you speak for Jay Powell, and are there gonna be interest rates at the time?

(all laughing) - Dear, bad man, come on.

- I would quickly note where we are today is probably still just slightly above where most members estimate of neutral is.

- Okay.

- So, we still are tapping the brakes just a little bit.

- Okay, all right.

Thanks, Matt, you're a good- (all laughing) Thanks, Tony, good to see you.

And, Monique, good to have you back.

- Yeah, thank you.

- Always good, Jason.

- Great to be here.

- Thank you.

Happy holidays, it's not too early.

Until next week, I'm Chris William, goodnight now, bye.

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