Third Quarter Report
SEPTEMBER 5, 2024
GDP/Gross Domestic Product is a yardstick that measures the total output of a state’s economy for a given year.
FORECAST H IGHLIGHTS
• For 2024, NORTH CAROLINA real GDP is expected to increase by 2.7 percent over the 2023 level.
• Fourteen of the state’s economic sectors are expected to experience output increases during 2024. The sectors with the strongest growth rates are agriculture with a real increase of 22.8 percent, retail trade with a real increase of 6.2 percent, construction with a real increase of 6.0 percent, mining with a real increase of 5.4 percent, information with a real increase of 4.0 percent, nondurable goods manufacturing with a real increase of 3.8 percent, educational and health services with a real increase of 2.9 percent, and business and professional services with a real increase of 2.7 percent.
• For 2024, NORTH CAROLINA establishments are expected to add 81,800 net jobs during the year, an increase of 1.6 percent.
• For 2025, NORTH CAROLINA real GDP is forecast to increase by 2.3 percent over the 2024 level.
• All fifteen of the state’s economic sectors are expected to experience output increases during 2025. The sectors with the strongest growth rates are information with a real increase of 5.1 percent; mining with a real increase of 3.4 percent; construction with a real increase of 3.0 percent; agriculture with a real increase of 2.7 percent; business and professional services with a real increase of 2.6 percent; transportation, warehousing, and utilities (TWU) with a real increase of 2.5 percent; and hospitality and leisure services with a real increase of 2.5 percent.
• For 2025, NORTH CAROLINA establishments are forecast to add 53,400 net jobs, an increase of 1.1 percent.
• By December of 2024, the state’s unemployment rate is expected to be 4.0 percent.
Quarterly Growth Rates
2024 GDP
Gross Domestic Product (GDP) should reach a level of $810,877.7 million in 2024. Real (inflation-adjusted) GDP is expected to increase by 2.7 percent over the 2023 level. This growth in 2024 will represent the fourth full year of growth since COVID-19.
For 2024, first quarter GDP increased by an annualized real rate of 2.3 percent. During the second quarter, GDP is expected to increase by an annualized real rate of 2.1 percent. In the third quarter, GDP is expected to increase by an annualized real rate of 2.3 percent. In the fourth quarter of 2024, GDP is expected to increase by an annualized real rate of 2.0 percent.
2024 Highlights
Current Dollars
Total Gross Product
Constant (2012 Dollars)
Total Gross Product
For 2024, there are two big questions. First, will there be a recession and second, will the FED continue to control inflation? The recession question is complicated as fiscal policy by Congress and the President continues to fight the FED, and its attempt to slow the economy by raising interest rates. After increasing interest rates by 525 basis points since March of 2022, the conventional wisdom would suggest that the economy should be slowing or we should be seeing signs of recession. After an incredibly strong four quarters in 2023 the economy seems to be showing signs of slowing slightly. First quarter 2024 U.S. GDP came in at a lackluster 1.4 percent, but picked up considerably in the second quarter to 2.8 percent.
However, while the FED is holding steady on the brakes by keeping interest rates high, Congress and the President are continuing to stimulate the economy with fiscal policy deficit spending. The deficit for fiscal year 2023 was over $1.6 trillion and the estimated deficit for 2024 is just shy of $1.6 trillion or almost 6 percent of GDP. Deficits of this size in the third and fourth years of economic recovery with the unemployment rate at or below 4 percent are simply irresponsible. If Congress does not control fiscal spending we are unlikely to see a recession in 2024, however, we are likely to see a slowing economy and a return of inflation. Without a change in policy, we are likely to see a return of demand pull inflation led this time, not by consumers and business, but by government spending.
2024 GDP S ECTOR A NALYSIS
The chart to the left presents the projected contributions of each major economic sector to North Carolina’s Gross Domestic Product (GDP). The real (inflation-adjusted) growth rate for 2024 is projected to increase 2.7 percent. Real growth rates for each sector (displayed in black type) are plotted on the horizontal axis. Percentages of GDP contributed by each sector (displayed in green type) are plotted on the vertical axis. The resulting rectangles show the weighted importance of each sector’s growth during 2024. All of the sector information presented in the table to the left is based on the North American Industry Classification System (NAICS) definitions.
Fourteen of the state’s economic sectors are expected to experience output increases during 2024. The sectors with the strongest growth rates are agriculture with a real increase of 22.8 percent, retail trade with a real increase of 6.2 percent, construction with a real increase of 6.0 percent, mining with a real increase of 5.4 percent, information with a real increase of 4.0 percent, nondurable goods manufacturing with a real increase of 3.8 percent, educational and health services with a real increase of 2.9 percent, and business and professional services with a real increase of 2.7 percent.
Six other sectors are expected to experience growth rates, at levels below the overall 2.7percent GDP real growth rate. These sectors are transportation, warehousing, and utilities (TWU) with a real increase of 2.4 percent; finance, insurance, and real estate (FIRE) with a real increase of 2.0 percent; government with a real increase of 2.0 percent; wholesale trade with a real increase of 1.0 percent; hospitality and leisure services with a real increase of 0.9 percent; and durable goods manufacturing with a real increase of 0.4 percent.
The other services sector is expected to experience no growth in 2024.
Quarterly Forecasted Growth Rates in Real GDP
2025 GDP
Gross Domestic Product (GDP) should reach a level of $858,003.2 million in 2025. Real (inflation-adjusted) GDP is expected to increase by 2.3 percent over the 2024 level. This growth in 2025 will represent the fifth full year of growth since COVID-19.
For 2025, first quarter GDP is expected to increase by an annualized real rate of 2.5 percent. During the second quarter, GDP is expected to increase by an annualized real rate of 2.1 percent. In the third quarter, GDP is expected to increase by an annualized real rate of 2.5 percent. In the fourth quarter of 2025, GDP is expected to increase by an annualized real rate of 2.6 percent.
2025 Highlights
Current Dollars
Total Gross Product
Constant (2012 Dollars)
Total Gross Product
Nondurable Goods
For 2025, there is one big question. Will there be a recession? The recession question will be complicated by two issues. First, fiscal policy by Congress and the President at this point continues to fight the FED, and its attempt to slow inflation, and second, a new administration will emerge in January with both sides indicating significant policy changes that could adversely impact the economy. Neither price controls nor tariffs would be good for the U.S. economy. We have strong evidence from history indicating that previous attempts to institute both policies have led to an increase in inflation and a recession.
In addition to fiscal policy concerns, we have seen the U.S. unemployment rate rise from 3.6 percent in July of 2023 to 4.3 percent in July of 2024. This has led to an increased probability that the FED will begin reducing interest rates. The expectation is that by December of 2024 the Fed Funds rate should drop by 50 to 75 basis points. During 2025, depending on economic data, the FED could continue with interest rate reductions by up to 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 four months will play a pivotal role in determining FED interest rate policy and the balance between a return of inflation and recession.
2025 GDP S ECTOR A NALYSIS
The chart to the left presents the projected contributions of each major economic sector to North Carolina’s Gross Domestic Product (GDP). The real (inflation-adjusted) growth rate for 2025 is projected to increase 2.3 percent. Real growth rates for each sector (displayed in black type) are plotted on the horizontal axis. Percentages of GDP contributed by each sector (displayed in green type) are plotted on the vertical axis. The resulting rectangles show the weighted importance of each sector’s expected growth during 2025. All of the sector information presented in the table to the left is based on the North American Industry Classification System (NAICS) definitions.
All fifteen of the state’s economic sectors are expected to experience output increases during 2025. The sectors with the strongest growth rates are information with a real increase of 5.1 percent; mining with a real increase of 3.4 percent; construction with a real increase of 3.0 percent; agriculture with a real increase of 2.7 percent; business and professional services with a real increase of 2.6 percent; transportation, warehousing, and utilities (TWU) with a real increase of 2.5 percent; and hospitality and leisure services with a real increase of 2.5 percent.
Eight other sectors are expected to experience growth rates, at levels equal to or below the overall 2.3 percent GDP real growth rate. These sectors are wholesale trade with a real increase of 2.2 percent; educational and health services with a real increase of 2.1 percent; retail trade with a real increase of 2.1 percent; durable goods manufacturing with a real increase of 2.0 percent; nondurable goods manufacturing with a real increase of 1.8 percent; finance, insurance, and real estate (FIRE) with a real increase of 1.7 percent; government with a real increase of 1.7 percent; and other services with a real increase of 1.6 percent.
The sector employment analysis presented on this page is based on the North American Industrial Classification System (NAICS). North Carolina employment is expected to reach 5,046,600 persons by December 2024, a 1.6 percent increase over the December 2023 employment level. The state is expected to add 81,800 net jobs in 2024.
Twelve of the state’s fourteen nonagricultural sectors of the economy are expected to experience employment increases during 2024. The sectors with the strongest projected employment increases in 2024 are other services at 3.5 percent and hospitality and leisure services at 3.4 percent.
Thousands of persons
The sector employment analysis presented on this page is based on the North American Industrial Classification System (NAICS). North Carolina employment is expected to reach 5,100,800 persons by December 2025, a 1.1 percent increase over the December 2024 employment level. The state is expected to add 53,400 net jobs in 2025.
Thirteen of the state’s fourteen nonagricultural sectors of the economy are expected to experience employment increases during 2025. The sectors with the strongest projected employment increases in 2025 are information at 5.6 percent and wholesale trade at 2.8 percent.
2025 Employment Highlights
Thousands of persons
2024 -2025 NORTH CAROLINA UNEMPLOYMENT RATE
U.S. Seasonally Adjusted
NC Seasonally Adjusted Forecast
NC Seasonally Adjusted
FORECAST reports historical seasonally adjusted monthly unemployment rates for North Carolina and the United States and forecasts the seasonally adjusted monthly unemployment rate for North Carolina. The seasonal adjustment accounts for variations in labor market conditions that cause regular fluctuations in the unemployment level each month.
The graph at the top of this page provides a summary of the monthly unemployment rates for 2024 and 2025. The solid blue line represents the United States seasonally adjusted historic unemployment rate. The seasonally adjusted unemployment rate for North Carolina is represented by the solid green line. The North Carolina seasonally adjusted unemployment rate forecast is represented by the solid red line. The seasonally adjusted rates for the United States and North Carolina can be compared directly and provide more reliable estimates than the unadjusted rates.
The United States and North Carolina started 2024 with unemployment rates of 3.7 percent and 3.3 percent respectively. The U.S. unemployment rate has been increasing through the first half of 2024 and is currently at 4.3 percent. The North Carolina rate has remained below the U.S. rate during all of 2024 and now stands at 3.6 percent. However, the North Carolina rate is likely to increase over the remainder of 2024 to 4.0 percent by December and continue to rise slightly during 2025.
Third Quarter Report
SEPTEMBER 5, 2024