A recession is unlikely in 2024, but the risk of inflation still looms. Consumers who indulged in a spending fling during the second half of the summer fueled economic growth for the North Carolina and U.S. economies, and spending shows signs of continuing.
“Overall, the final numbers for 2023 look good, with a strong second half of the year, which led to 2.8% annual Gross Domestic Product growth for North Carolina,” said John Connaughton, professor of financial economics with UNC Charlotte’s Belk College of Business.
Connaughton released the North Carolina Economic Forecast 2024 First Quarter Report Thursday, March 14, noting that the state and national economies are defying the impact of increased interest rates from the U.S. Federal Reserve’s monetary policy over the past two years.
“Even as the Fed holds steady on the brakes,” Connaughton said, “Congress and the President continue to stimulate the economy with fiscal policy deficit spending. Deficits for fiscal years 2023 and 2024 are projected to be over $1.6 trillion or almost 6% of GDP. Deficits of this size in the third and fourth years of economic recovery with the unemployment rate below 4% 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.”
2023 Gross Domestic Product Analysis
For 2023, North Carolina’s real (inflation-adjusted) GDP is forecast to increase by 2.8% over the 2022 level, representing the third full year of growth since COVID-19. (Note: fourth-quarter numbers are still being finalized.)
Connaughton expects output increases for 11 of the state’s 15 economic sectors. The sectors with the strongest expected growth rates include:
- Information: 12.7%
- Retail Trade: 9.5%
- Educational and Health Services: 6.4%
- Transportation, Warehousing and Utility: 5.2%
- Hospitality and Leisure Services: 3.9%
- Construction: 3.7%
Expectations are that three sectors will have experienced declines during 2023:
- Agriculture: -24.2%
- Mining -9.4%
- Other Services: -1.9%
2023 employment
Of the state’s 14 nonagricultural sectors, nine saw employment increases during 2023. The sectors with the strongest employment gains are:
- Educational and Health Services: 5.3%
- Hospitality and Leisure: 4%
North Carolina employment reached 4,951,900 persons by December 2023, a 2% increase over the December 2022 employment level. The state added 99,400 net jobs in 2023, for an increase of 2%. The state unemployment rate fell during the middle of 2023 but rose to 3.6% in December, according to the report.
2024 forecast
Looking ahead, the report forecasts modest growth, which would mark the fourth full year of growth since COVID-19. North Carolina’s real (inflation-adjusted) GDP growth rate for 2024 is projected to increase by 2.5%. Of the state’s economic sectors, 13 are expected to see output increases.
North Carolina employment is expected to add 53,500 net jobs, reaching 5,005,400 persons by December 2024, a 1.1% increase over the December 2023 employment level. By December of 2024, the state’s unemployment rate is expected to reach 4%.