From Daily Planet Staff Reports

Research economist Tom Tveidt offered what he termed “a very positive” prediction for the Asheville economy — noting that it should weather rough economic times better than many other places — during the Ninth Annual “Asheville Metro Economy Outlook” Diana Wortham Theatre at Pack Square in downtown Asheville on July 23.

Tveidt is director of the Asheville Metro Business Research Center, operated by the Asheville Area Chamber of Commerce, which sponsored the program.

The other speaker, James F. Smith, addressed the national and world economies. Smith is chief economist for Parsec Financial and a professor at Western Carolina University.

Tveidt spoke for 30 minutes, followed by Smith for 20 minutes and a question-and-answer session that lasted 15 minutes. About 200 people, mostly in business attire, attended. (Stories on Smith’s remarks and the Q&A appear on Page 7.)

Before the two addresses were given, the chamber recognized the presence in the audience of Nathan Ramsey, chairman of the Buncombe County Board of Commissioners and a Fairview dairy farmer. A chamber official praised Ramsey as “a great friend of the Asheville business community.”

Tveidt, who has worked for the chamber for nine years, opened the session by emphasizing that “if there is one message I want to leave with you, it’s how unique a local economy is,” particularly Asheville’s.

In his presentation, which included slides shown on a big screen, Tveidt first reviewed employment growth, noting that “right now, we’re growing at a very high rate” — 2.1 percent — higher than the state and nation.

After the last recession in 2001, the Asheville area suffered seven months of job losses, which was “much better than the state or nation.”

In 2001, “there were losses in all metro areas in North Carolina — except Asheville. We did the best ... Right now, we’re in the middle of the pack.”

In terms of population size, Wilmington probably is most comparable to Asheville, while Hickory is geographically the nearest state metro areato Asheville.

“What makes Asheville different?” he asked.

The answer, at least from an economist’s viewpoint, is Asheville’s strength in sectors that include health services, leisure and hospitality, manufacturing and in migration. He also singled out the professional and business services in his view because of its growth potential in the area.

Asheville is led by health services, which totals 27,500 employees — “very significant for this area,” he said. “We employ 6,000 or 7,000 more than we should because we’re a regional hub.”

As for leisure and hospitality, Tveidt said the Asheville area employs about 23,500 — “about 4,000 more than expected for a community this size.”

In manufacturing, Asheville totals 20,700 workers — about “3,000 to 4,000 people than you might expect for this size community.”

Another healthy sector is in migration, which averages 12,500 people per year.

As for professional and business services, he said about 18,500 people are employed in that sector — “we’re actually under-represented. We actually have 6,000 (workers) less than we should have in this community.”

Tveidt then turned to what he termed “Asheville drivers of employment growth.”

While manufacturing has shown a decline since 1990 in the Asheville area (about 500 jobs have been lost in the past year alone), there has been a “huge rise” in the last two years in the leisure and hospitality industry, he said.

“Always at the top (in Asheville) is health services,” he said. “Professional and business services continues to jump.”

The biggest wage growth has been in the health industry, where $100 million in wages were earned in the Asheville area last year, accounting for 30 percent of all area wage growth since 2001.

In fact, wage growth in the health industry has been up every year since 1990, noting that it is virtually “recession-proof.”

Tveidt added, “They’re inverted — when there’s a recession. They do better when there’s a recession because it (the industry) absorbs more labor that’s available.”

He noted that 57 percent of the health care labor force is composed of women ages 34-55. With its 11 percent annual turnover rate, it ranks as the lowest of the major sectors. “The health care industry is sort of our CD (certificate of deposit) in the bank.”

Regarding manufacturing, he said, “We don’t know what’s happening with manufacturing because it is in a transmutation or metamorphosis process because of globalization resulting in jobs going overseas.

Tveidt said manufacturing in the Asheville area is undergoing “new math” in which total wages increase as jobs are cut. Exports in the Asheville area totaled $665 million last year.

Inasmuch as “every job lost increases other wages, it means they’re on the cutting edge,” he noted.

As for leisure and hospitality, he said it is “too early”’ to make any assessments, but that it contains numerous restaurant jobs with flexible work schedules that particularly appeal to young people.

“This (restaurant) sector added the most jobs” last year in the leisure and hospitality category — “and it’s probably on pace.

Leisure was up 0.4 percent for lastyear, but with travel projected to be down 2 percent for the coming year, challenges lie ahead,.

“Restaurant jobs accounted for 80 percent of growth in jobs in this sector in the last few years.”

Tveidt added that “if there’s any industry that could cut its workforce, it’d be the restaurant sector because it averages 20 to 30 percent turnover and 40 percent of its workforce is under age 24.

For the first time in years, Asheville has suffered declining (lodging) occupancy rates for three months in a row, he said. “Asheville is down 1.4 percent for the year, but (that is) better than other places.”

As for in migration, he said about 95 percent of net population growth comes from people moving to the area. The annual appreciation averages 4.5 percent on Asheville area homes, he said.

Fort Lauderdale and West Palm Beach, both Florida cities, “are the two areas that provide the most migrants to Florida,” Tveidt said.

“We’ve seen home sales declines since November 2007,” he noted. The metro area continues to be down year to date.

In examining home sales data, Tveidt said 44 homes sold last year for more than $1 million, while this year only 16 residences sold for more than $1 million.

For those wanting to relocate to Asheville, “waiting is important, as other markets languish” and people choose first to sell their homes elsewhere before buying a home in this metro area.

“The Baby Boomer market is what we attract,” Tveidt said. “They will come. Many of them can’t come right now.”

As for medium-priced homes, he said “we’ve above the rating” for average home prices statewide and nationally, “which puts us in a different market.

He added that Asheville building permits and homes sales are off about 50 percent from last year.

As a counter balance, however, he reiterated, “We’re at 4.5 percent annual home apprecation, which is usual for Asheville.”

Asheville is 40th in the nation for home apprecation,” which, he noted, is “great, relative to Florida.”
As for his outlook for Asheville, Tveidt listed the following:

• The Asheville economy is unique — it’s different.
• Local fundamentals are stable.
• Jobs are still being added.
• The metro area is recession-resisent
• The in migrants “will return”

“We’ve had 51 straight months of job growth,” Tveidt noted.

“So, it’s a very positive outlook, I think,” he said of his economic review of the metro area. “If there is a national downturn, I think we’ll weather it very well.”