There’s been plenty of uncertainty recently swirling around the national economy. Trade tensions, stock market ups and downs and movements in interest rates have all captured headlines and editorials. But let’s get closer to home and talk about the North Carolina economy.
First and foremost, North Carolina’s economy has continued to expand. In the past year – measured from to – the state added over 75,000 jobs, and the pace of job growth was slightly faster than the nation.
The average wage rate (pay per hour) of North Carolina workers also continued to increase in , and the gain exceeded the average increase in the prices of products and services workers buy. In other words, improvements in worker pay outpaced inflation, meaning the average standard of living improved.
Average wage rates in North Carolina still lag average wage rates in the nation. Economists who study state pay differences say there are two reasons behind this result. One is the lower cost-of-living in North Carolina compared to the country. Studies show our state’s prices are between 5 and 10 lower than in the nation. Second is lower educational attainment in the state compared to the country. There is a strong correlation between educational attainment and worker wages.
During the year including the second half of and the first half of , the Asheville, Charlotte and Winston-Salem regions experienced the strongest growth in jobs. At the other end of the spectrum, Jacksonville, Burlington, Greensboro, Greenville and New Bern lost jobs.
Unfortunately, there are some worrying aspects of the recent state economy. Farm output in North Carolina has suffered a large reduction in production. While there can be many reasons for this, clearly one is the on-going trade tensions with China. China’s tactics in this dispute have resulted in fewer key North Carolina farm products being sold to that important country.
Another concern is construction. Residential building permits are on track to decline in the state in . If it’s any comfort, the same trend is occurring in the nation. Perhaps lower interest rates later this year will turn around this decline.
All of this information shows where North Carolina has been. But where is the state economy going in the future?
North Carolina will continue to grow and add production and jobs. However, the pace of growth, while positive, will slow. Rather than expanding at close to a 3 annual rate, growth will be closer to 2.
Note this doesn’t imply a recession. A recession means the growth rate is negative and the economy is contracting – that is, getting smaller. My headlights don’t show this yet. Certainly, however, if conditions change, I can change my forecast.
Any state’s economy is a complex mix of many factors. You decide if these factors have moved – and will continue to move – in a positive direction for North Carolina.