• 75°

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

BREAKING NEWS

Sheriff’s Office: Two deputies injured, suspect shot during chase on U.S. 601

Education

One speaks, two write to oppose Enochville Elementary closure

Local

City partners with Rowan Helping Ministries to establish donation-driven utilities assistance program

Elections

Board of Elections continues counting absentee ballots, resumes ‘curing’ deficient ones

Business

County commissioners delay consideration of new events center in China Grove

Coronavirus

New COVID-19 outbreak emerges at N.C. State Veterans Home, another declared over

Crime

Police: Two armed men rob local convenience store

Crime

Blotter: Local woman swindled out of hundreds in gift card scam

News

‘People are the parade’: Salisbury’s annual Christmas parade reinvents itself in year of coronavirus

News

Commissioners grant permit, allow Reaper’s Realm to continue operations for remainder of Halloween season

Elections

Republican Rep. Budd maintains fundraising lead over Democratic challenger Huffman

Local

City council to consider ‘Share 2 Care’ fund for locals behind on water, sewer payments

Education

None speak against closure during hearing to shutter Faith Elementary

Crime

Blotter: Police find car windows shot out, bullet holes in home on West Horah Street

Crime

Five held at gunpoint in East Lafayette Street robbery

Ask Us

Ask Us: Readers ask questions about Shober Bridge, voting safeguards

Elections

Political notebook: More than 1.4 million votes cast already in North Carolina

Elections

‘Souls to the polls’: More than 1,300 cast ballots on first Sunday of early voting

Crime

Crime blotter: Salisbury man faces charges for firing shotgun in city limits, drug possession

Local

Search continues for missing hiker from Asheville

Local

A stroll through the scarecrows: fall-themed activity draws visitors to NC Transportation Museum

Elections

Despite scandal, Cunningham maintains small lead in Senate race; supporters say policy positions more important

Lifestyle

Rowan Helping Ministries golf tournament raises $20,000

Local

Town of Spencer forging ahead five years after drafting plans for Park Plaza