Karl W. Smith, Assistant Professor Public Economics and Government for the UNC School of Government, recently published another edition of his Economics Bulletin. You can download this report for free at this page on the School of Government website.
Dr. Smith’s report highlights national and statewide economic activity on the basis of several indicators, including unemployment, inflation and productivity. His analysis leads to the following conclusion (excerpted below):
North Carolina was hard hit by the most recent recession in large part because of significant job losses in the financial sector. It is unlikely that the state’s financial industry will recover anytime soon. North Carolina faces significant headwinds moving forward. Nonetheless, the baseline forecast is for steady if tepid growth. Unemployment will remain high for some time, and restructuring will be difficult, particularly in the Charlotte region.
On the other hand, policy makers should be aware that significant risks still remain. The opportunity for stimulus funding is fading. Either the state budget will have to shrink in size or it will have to consume a larger fraction of economic resources. Either choice will involve significant sacrifice on the part of the state’s residents. This will cause obvious difficulty in balancing the state budget, but it also means that the very likely possibility of state employee layoffs will cause economic activity to be further slowed.