RALEIGH – The U.S. Census Bureau has issued some new data reflecting the economic and social trends of the past few years. For those just arriving here in North Carolina – or recklessly heeding the word of politicians running for reelection – you might to take a look at the new information, as it bears out the fact that the state has had a pretty rough time.

According to an Associated Press report on the new data, North Carolina was one of only three states in the nation to experience both a measurable increase in the poverty rate and a decline in personal income during the 2002-2003 period (Illinois and Texas were the other big sufferers). The percentage of North Carolinians living in poverty increased from 13.1 percent in 2000-02 to 14.2 percent in 2001-03 (this is measured in rolling three-year averages). The rate of uninsured people rose from 14.9 percent to 16.1 percent during the same period.

But what about more recent good news? North Carolina has been experiencing faster employment growth since January 2004 than in most of the rest of the country. Even after some downward revisions in the jobs numbers for the summer months, the trend does look heartening.

However, you have to scan the entire racetrack to see who is ahead. Your horse might well pick up speed, but what if he’s at the back of the pack? Playing catch-up isn’t “leading.” And that’s a fair characterization of North Carolina’s economic recovery. Since the onset of recession in the winter of 2000-01, North Carolina has lost far more jobs than any other Southern states, measured however you like, and more than the average state. For much of the country, the recession was shallow and recovery began later in 2001 or in 2002. But in North Carolina, the economy continued to lag behind throughout most of 2002 and 2003, with a recovery in employment really only starting this year. In effect, firms in our state have only begun to add back the jobs than firms in other states already restored months or years ago. Our horse is starting to pick up some speed, but it’s still well to the back of the pack.

Gary Shoesmith, an economist at Wake Forest University, points out something similar about the apparent improvement in unemployment rates that North Carolina has experienced. Some discouraged workers have dropped out of the workforce or no longer show up in the data due to the length of their spells of joblessness. That makes unemployment look artificially low.

Both Shoesmith and I are, however, optimistic. State politicians do influence state economic growth. But they don’t cause it, for the most part. Gov. Mike Easley and the General Assembly raised taxes three years in a row, imposing an average cost of about $1 billion a year since 2002 on the economy – and that’s just a static estimate, assuming that the higher tax rates on income and retail sales had no effect on the size of the economic pie, which is not a reasonable assumption. But let’s not overstate the point. Lots of factors influence economic decisions, and North Carolina still enjoys many assets and advantages. Plus, the national policy mix is still mostly growth-enhancing: lower federal tax rates on work, savings, and investment; no recurrence of overall inflation; and an apparently serious attempt by the Bush administration to push forward on global tax reductions on commerce (commonly known as free trade).

So unless state politicians keep throwing hurdles in the way, we ought to get closer to the rest of the pack before too long. Of course, the 2005 legislative session isn’t too far off, and there’s going to be another budget hole. . .

Hood is president of the John Locke Foundation and publisher of Carolina Journal.