Ad Spot

October 29, 2020

John Hood: State’s economic recovery is sputtering

By John Hood

RALEIGH — According to the latest jobs report, North Carolina’s headline unemployment rate fell to 6.5% in August, down from 8.5% in July. Good news worth celebrating, right?

Don’t pop the cork on that champagne just yet. This was mostly a statistical artifact, not a major improvement in the state’s labor market. While the government counted about 100,000 fewer North Carolinians as unemployed last month, only 28,000 got jobs. The remaining 72,000 dropped out of the labor force.

In other words, they either gave up looking for a job in North Carolina or left the state. In a healthy economic recovery, your labor force should be growing, not shrinking. Indeed, according to other measures, North Carolina is experiencing the worst economic recovery in the southeastern United States.

Let’s begin with the issue I just referenced: labor-force participation. In February, 61.6% of North Carolinians at least 16 years of age and not living in some kind of institution were participating in the labor force. That is, they were either employed or actively looking for a job.

In August, that rate was 57.5%. North Carolina’s labor-force participation is down 3.9 percentage points. The other 11 states in the Southeast all had smaller declines. The regional average dropped by just 1.5 points.

Now let’s look at employment itself. Unlike the unemployment and participation rate statistics, the government’s job count comes from a survey of employers, not households. This survey has a much larger sample size and produces more stable results. Unfortunately, it doesn’t paint a rosier picture of our state’s labor-market recovery to date.

In August, North Carolina employers reported 4.3 million filled positions. That comes to about 350,000 fewer jobs than in February, before the onset of the COVID-19 recession, a drop of 7.6% in total employment.

Again, that’s the worst performance in the Southeast. The next-hardest-hit state, Louisiana, experienced a 7% decline during the same period. Among our neighbors, employment fell 6.1% in Virginia, 5.6% in South Carolina, 5.4% in Tennessee and 4.7% in Georgia.

Want to broaden our perspective beyond the labor market to take in the rest of the state’s economy? Unfortunately, the resulting picture has a built-in time lag. The most-recent measure of gross domestic product by state was for the first quarter of 2020, which includes only the initial month of COVID impact (March). With that caveat in mind, however, our state’s performance still lags the regional average, although not by as much. North Carolina GDP fell 5.1% during the first quarter. That’s worse than in Georgia (4.7%), South Carolina (4.8%) Virginia (3.8%) and the Southeast as a whole (5%), but it’s better than Tennessee’s 6.2% drop.

Perhaps the next wave of economic reports will be more positive. Perhaps North Carolina’s second-quarter GDP growth will turn out much better. Perhaps our labor markets will look much healthier by October or November than they do right now. Taking an accurate temperature of any economy is always a challenging task, and COVID has made it more so in a number of ways. So, we should always be open to the possibility that employment and GDP statistics will undergo significant revisions in the future.

Right now, though, based on the available evidence, it would be fair to say that North Carolina’s economic recovery is sputtering. Thousands of North Carolinians are finding new jobs every month, to be sure, but thousands more — frustrated, depressed, angry — are being left behind.

For some, their employers or their own small businesses have gone bankrupt. Others have intact employers but, faced with school closures, are having to cut back their hours at work or leave their jobs altogether so they can stay home with their young children. And some are exiting the state in search of better opportunities elsewhere in the region.

As we are in the middle of election season, you are of course free to draw whatever political conclusions you like. But first, please just give a thought, and say a prayer, for the North Carolinians who are suffering.

John Hood is chairman of the John Locke Foundation.

Comments

Business

With Eastern Fence’s arrival, industrial park on Statesville Boulevard poised for second life

Business

Prehistoric Prey: Dinosaur Hunt to be held at the Rowan County Fairgrounds this weekend

Elections

Rep. Warren leads challenger Heggins in fundraising, cash on hand

News

Panthers, Falcons look to put mental mistakes behind them tonight

Education

Optimism grows for new charter school in Faith

Columnists

My Turn, Carol Spalding: Rowan-Cabarrus poised to train, educate workforce

Education

Education briefs: Wallace and Graham announces scholarships for high school seniors

Crime

blotter: Oct. 29

News Main

London column: World Series MVP Corey Seager honed his skills in Kannapolis

Elections

Election 2020: Howard, Townsend differ on handling of racial issues, redistricting

Local

RSS moves to remote learning day because of hurricane remnants

Education

Shoutouts

Education

At Horizons Unlimited, Mary Meyer explores passion for animals

Elections

Supreme Court leaves NC absentee ballot deadline at Nov. 12

Crime

Police warning about catalytic converter thefts

Local

Rowan Public Library to resume normal hours

Education

RCCC selects new student ambassadors

Local

Rowan Sheriff provides Halloween safety tips, precautions

Coronavirus

Two of four new COVID-19 deaths reported Wednesday from one nursing home

Crime

Spencer man charged with death by distribution after overdose death

Local

Salisbury Police Department receives grant to hire homeless advocate

Education

Livingstone paints mural to remind students to vote

News

Commissioners OK second phase of COVID-19 protection plan

Crime

Blotter: Salisbury man charged with drug possession after undercover drug deal