Charlotte Economist John Connaughton Delivers N.C. 2024 4th Quarter Forecast
2024 marks the fourth year of economic growth in North Carolina since the COVID-19 pandemic recession of 2020, even as Hurricane Helene’s destruction in the western part of the state dampened the state’s overall economy in the fourth quarter.
“Unlike coastal areas, most businesses and households in the western part of North Carolina do not have flood insurance,” said John Connaughton, UNC Charlotte professor of financial economics.
“Normally, rebuilding after a natural disaster stimulates the economy, but in this case the lack of insurance could put a burden on small businesses and households and also delay the rebuilding stimulus on the economy.”
Connaughton presented these and other findings from the UNC Charlotte North Carolina Economic Forecast 2024 Fourth Quarter Report at a community presentation Wednesday, Dec. 11 at The Dubois Center at UNC Charlotte Center City.
U.S. Federal Reserve policy is uncertain going forward, Connaughton said. After two reductions in the federal funds rate in the fall, the Federal Reserve is now wavering on rate policy. This uncertainty will likely have only a small impact on 2024, once final numbers are in, but could have greater impact in early 2025, depending on future policy, he said.
“We have seen the U.S. unemployment rate rise from 3.3% in May of 2023 to 4.1% in October of 2024,” he said. “As a result of the weakness in the labor market, the Federal Reserve has begun reducing interest rates. During 2025, depending on economic data, the Fed could continue with interest rate reductions by up to another 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.
2025 Projections
For 2025, North Carolina’s real — inflation adjusted — Gross Domestic Product is forecast to increase by 2.3% over the 2024 level. All 15 of the state’s economic sectors are expected to experience output increases during 2025. GDP is the main measure of economic output. The sectors with the strongest projected growth rates are:
- Information: 4.9%
- Construction: 3.1%
- Mining: 2.9%
- Hospitality and leisure services: 2.8%
- Transportation, warehousing and utilities: 2.7%
- Nondurable goods manufacturing: 2.6%
- Business and professional services: 2.6%