NORTH CAROLINA ECONOMIC FORECAST LED BY BELK COLLEGE OF BUSINESS ECONOMIST PROVIDES EXPERT ANALYSIS OF ECONOMY
2024 will mark the fourth year of economic growth in North Carolina since the COVID-19 pandemic recession of 2020, even as Hurricane Helene’s destruction in the western part of the state dampened the state’s overall economy in the year’s fourth quarter.
In addition, U.S. Federal Reserve policy is uncertain going forward. After two reductions in the federal funds rate in the fall, the FED is now wavering on rate policy. This uncertainty will likely have only a small impact on 2024 but could have a significant impact in early 2025, depending on future FED policy. Additionally, it remains to be seen what impact the new federal administration will have on the economy.
The North Carolina Economic Forecast projects real GDP in 2025 to increase by 2.3 percent over 2024, representing the fifth full year of growth since COVID-19. All 15 of the state’s economic sectors are expected to show output increases during the coming year, and 13 of the state’s 14 nonagricultural sectors are expected to see job growth.
SUMMARY OF FINDINGS: 2024
Gross Domestic Product, the main measure of economic output, should reach a level of $838,668.1 million in 2024. Real (inflation-adjusted) GDP is expected to increase by 3.5 percent over the 2023 level. By December 2024, the state’s unemployment rate is expected to reach 3.9 percent.
Of the state’s 15 economic sectors, 12 are expected to experience output increases during 2024. The sectors with the strongest anticipated growth rates are:
• Agriculture: 22.4%
• Mining: 9.0%
• Retail trade: 7.7%
• Construction: 6.6%
• Educational and Health Services: 5.4%
• Nondurable goods manufacturing: 5.1%
For 2024, North Carolina establishments are expected to add 68,100 net jobs during the year, an increase of 1.4 percent. Of the state’s 14 nonagricultural sectors of the economy, 10 are expected to show employment increases this year. The sectors with the strongest projected employment increases are education and health services at 3.7% and hospitality and leisure services at 2.6%.
SUMMARY OF FINDINGS: 2025
For 2025, North Carolina real GDP is forecast to increase by 2.3 percent over the 2024 level. All 15 of the state’s economic sectors are expected to experience output increases during 2025. The sectors with the strongest growth rates are:
• Information: 4.9%
• Construction: 3.1%
• Mining: 2.9%
• Hospitality and leisure services: 2.8%
• Transportation, warehousing and utilities: 2.7%
• Nondurable goods manufacturing: 2.6%
• Business and professional services: 2.6%
North Carolina establishments are forecast to add 53,400 net jobs in 2025, an increase of 1.1%. Thirteen of the state’s 14 nonagricultural sectors of the economy are expected to show employment growth during 2025. The sectors with the strongest projected increases are information at 5.7% and wholesale trade at 2.8%. The state’s 2025 unemployment rate is projected at 4.2%.
“We have seen the U.S. unemployment rate rise from 3.3 percent in May of 2023 to 4.1 percent in October of 2024. As a result of the weakness in the labor market, the Federal Reserve has begun reducing interest rates. During 2025, depending on economic data, the FED could continue with interest rate reductions by up to another 100 basis points by mid-year. However, if Congress does not begin to control fiscal spending, we are likely to see a return of inflation in 2025, which could disrupt the FED’s plans. The economic data over the next several months will play a pivotal role in determining FED interest rate policy and the balance between a return of inflation, a recession or a boom.”
– North Carolina Economic Forecast Director John Connaughton
HURRICANE HELENE SWAMPS NORTH CAROLINA ECONOMY IN 4Q 2024
The remnants of Hurricane Helene engulfed Western North Carolina in late September, causing deaths and injuries, catastrophic flooding, widespread property destruction and a significant drop in employment. The devastating impact in the western part of the state has spilled over to the overall state economic performance.
North Carolina has already seen a notable decline in establishment employment in October, dropping 5,500 jobs compared to September.
“Recovery from Hurricane Helene will take a long time because of the nature of the damage. Unlike coastal areas, most businesses and households in the western part of North Carolina do not have flood insurance. Normally, rebuilding after a natural disaster stimulates the economy, but in this case the lack of insurance could put a burden on small businesses and households and also delay the rebuilding stimulus on the economy.” – North Carolina Economic Forecast Director John Connaughton
ABOUT THE NORTH CAROLINA ECONOMIC FORECAST
The North Carolina Economic Forecast has been a leading source of economic information for North Carolina for over 40 years. UNC Charlotte’s Belk College of Business publishes the practical, use-inspired research report each quarter.
Dr. John Connaughton is Professor of Financial Economics and Director of the North Carolina Economic Forecast in the Belk College of Business. He earned his doctoral degree in economics from Northeastern University and has been UNC Charlotte faculty since 1978.
Dr. Connaughton has authored more than 30 scholarly articles on economic forecasting techniques and on economic impact analysis. He has produced more than 50 economic impact reports and provides thought leadership through media interviews on a variety of economic issues. He has served on the Governor’s Task Force on Economic Incentives and the Oversight Committee for the William States Lee Act. He has also testified to the North Carolina General Assembly on the impacts of COVID-19 on the state’s economy.