If 2013 was the year of reform, 2014 promises to be the year of recovery.
Tax reform goes into effect in 2014, lowering tax rates for every individual and corporation in the state. Regular review and routine repeal of burdensome regulations will begin to loosen government’s grip on businesses, signaling that North Carolina is again open for business and welcomes entrepreneurs and investors.
Infrastructure investments and long-term responsible fiscal planning send a strong signal that we are back in the game. Education reforms will ensure those earning high school diplomas have market-ready skills; this will encourage job creators to choose North Carolina.
It’s early, of course, but we are seeing signs that North Carolina is coming out of the recession and may even rebound faster than any state in the country as our counterparts and competitors struggle to retain fiscal stability after five years of an oppressive downturn.
For the first time in five years, North Carolina is expecting an economic recovery in 2014. Consumer confidence is the highest in six years. Housing prices are increasing at a steady rate for the first time in five years. After many dark days, things are looking brighter.
According to a September 2013 UNC-Charlotte economic forecast, North Carolina’s Gross State Product is expected to grow by 3.3 percent over the 2013 level, which was 2.1 percentage points higher than 2012. All major economic sectors are expected to grow, with agriculture surging by 16.5 percent. For the first time, total GSP is expected to exceed $500 billion.
After months with one of the highest unemployment rates in the country, North Carolina’s unemployment rate is now 7.4 percent — the lowest since December 2008. We added 56,800 jobs from November 2012 through November 2013. From June 2011 — during the first fiscal year of Republican control of the General Assembly — to November 2013, North Carolina has added 171,000 jobs, a growth rate of 4.4 percent, and faster than the national rate of 4.0 percent. North Carolina’s underemployment rate is dropping, too, down to 14.7 percent from a previous-year high of 17 percent.
The General Assembly’s October 2013 fiscal research quarterly revenue report found total General Fund revenue was up by 5.7 percent, with total tax revenue up 5.5 percent. General Fund revenue is about $80 million higher than expected. And we’re hearing rumors that the “surplus” may grow as the year progresses, alleviating the budget crunch of the last few years.
N.C. State University economist Mike Walden predicts even higher job growth in North Carolina in 2014 — more than 100,000 new jobs and a drop in the unemployment rate to 6.8 percent. He credits four factors for North Carolina’s recovery — an increase in construction, more college graduates, a growing number of retirees, and a renewed strength in manufacturing.
As the national economy improves, demand for products and output increases. As demand rises, North Carolina is poised to take advantage of new opportunities. North Carolina is the fourth-largest manufacturing state in the country and is the Southeastern leader in manufacturing employment.
North Carolina’s manufacturing sector is transitioning from reliance on tobacco and furniture production to becoming a top competitor in aerospace, aviation, automotive, biotechnology, pharmaceuticals, information technology, and software. Manufacturing comprises about 20 percent of North Carolina’s GSP and is the largest source of exports from the state. Efficiencies, automation, and cost-competitiveness have transformed the manufacturing industry, bringing new jobs and opportunities.
Public policy decisions are critical to the success and nurturing of any industry. Policies enacted in 2013 put North Carolina in the position to be a national leader in 2014.
North Carolina’s economy already is showing improvement. Large economies are complicated and sensitive to all kinds of influences. Decisions made at the federal level (sequestration, Obamacare) and international events (Middle East unrest, financial concerns in Europe) have an impact in North Carolina. But sound policy decisions by the General Assembly and the McCrory administration are helping to turn the state in the right direction.
During the 2012 election cycle, we were promised changes that would get people back to work and make them less dependent on government. We saw reforms enacted in 2013 that laid the groundwork to make good on those promises.
It’s been tough. It’s taken bold thinking, commitment, and a strong backbone to implement changes — making our tax system fair, loosening the grip of government regulations, ending decades of political patronage in transportation projects, and revamping a failing education system.
We’re on the right track, and in 2014 North Carolina should begin to enjoy the positive results of keeping those promises.
Becki Gray (@beckigray) is vice president for outreach at the John Locke Foundation.