RALEIGH – North Carolina has had a pretty good economic run until recently, but troubling signs not just of short-term pain but long-term deterioration of the state’s economic base continue to present themselves. The latest is a new federal report that shows per-capita income in the state growing at the slowest pace in the Southeast from 2000 to 2001.
Like unemployment rates and other indicators, per-capita income growth has been an area where North Carolina used to lead the region. Not anymore. According to the latest estimates, personal income per person rose by only 2 percent last year, compared with 2.7 percent growth for the nation as a whole and growth rates exceeding 3 percent in many nearby states, including Georgia, Alabama, Arkansas, Tennessee, and Virginia.
It gets worse. When you look at the components of personal income and how they changed from 2000 to 2001, several major industries in North Carolina posted significant declines in average earnings, including agriculture, durable-goods manufacturing, non-durable-goods manufacturing, and wholesale trade. So how did we end up with much in the way of positive growth at all? A big reason: transfer payments, including government benefits, rose by more than 10 percent.
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Not only are these statistics further evidence of trouble in North Carolina’s traditional industries, but also they suggest that the state’s tax-burden ranking, announced earlier this month, will get worse on revision. The new personal income data came out too late for the Washington-based Tax Foundation to use them in calculating “Tax Freedom Day” and rankings of state/local tax burdens. According to a report in Business Week, the federal government’s revisions particularly affected North Carolina and other states with high concentrations of technology companies.
So don’t be surprised if our relative ranking in taxes as a percentage of income looks a bit scarier a year from now.