Charlotte Belk College Of Business Reports Third Year Of Growth Post COVID
Over the preceding 21 months, the relentless pursuit of economic stabilization by the U.S. Federal Reserve has manifested in a gradual ascent of interest rates aimed at tempering the economy and warding off inflationary pressures. As the economic pulse decelerates, both in North Carolina and the broader U.S. landscape, the specter of inflation looms on the horizon.
Renowned financial economist John Connaughton, serving as a luminary voice from UNC Charlotte’s Belk College of Business, remarked on the ebb and flow of the economic tide. “The robust Gross Domestic Product (GDP) growth witnessed in the first quarter proved ephemeral,” he opined. “Second-quarter expansion dwindled to a modest 1.1%, with late 2023 and early 2024 poised for a sustained deceleration.”
Presenting the North Carolina Economic Forecast Fourth Quarter Report on Thursday, December 14, Connaughton highlighted two pivotal inquiries for the forthcoming year. “First, the looming prospect of a recession; second, the Federal Reserve’s ability to rein in inflation,” he mused. The complex interplay between Congressional fiscal policy and the Fed’s concerted efforts to impede economic acceleration through interest rate hikes complicates the recession forecast.
In a notable move on December 13, the Federal Reserve maintained its key interest rate while signaling a potential trio of rate cuts in 2024.
Analyzing the Gross Domestic Product for 2023, North Carolina’s real GDP is prognosticated to ascend by 2.5% over the 2022 benchmark, marking the third consecutive year of growth post-COVID-19. Connaughton anticipates output boosts across 12 of the state’s 15 economic sectors in 2023, with Information, Educational and Health Services, and Transportation leading the growth charge.
However, the economic tableau is not without its troughs, as three sectors—Agriculture, Mining, and Other Services—are projected to undergo contractions in 2023.
Shifting focus to employment dynamics, 11 of the state’s 14 nonagricultural sectors are poised for workforce expansions in 2023. Noteworthy sectors include Mining and Educational and Health Services, with overall employment expected to reach 4,947,300 individuals by December 2023—a 2.0% uptick from the preceding year. Although the state witnessed a mid-year dip in unemployment, the rate rebounded to 3.4% in October, as outlined in the report.
Peering into the future, the 2024 economic preview envisages modest growth. North Carolina is slated to add 53,400 net jobs, culminating in a 0.9% employment uptick over December 2023 levels. The unemployment rate is forecasted to reach 4.0% by December 2024.
Projections for real GDP growth in 2024 indicate a 1.9% increase, with 14 economic sectors anticipated to witness output expansions. As North Carolina navigates these economic crosscurrents, the efficacy of Federal Reserve policies and the delicate balance between growth and inflation remain pivotal to the state’s economic trajectory.