Slow Growth Expected for NC Economy
NORTH CAROLINA -- North Carolina's economy is growing, but the size of growth is disappointing. That's according to an economist at the Mid-Year Economic Update, held Monday.
And the state's economic challenges stem from one big change in the job market.
According to the featured speaker, John Connaughton, there are two ways to grow the economy.
“Increases in labor force and increases in productivity,” Connaughton said.
The economist said rural areas are struggling to grow jobs, while urban areas are struggling to boost productivity.
“It is more a function of what it is that people buy that is driving this productivity issue than we realize,” Connaughton said.
He believes consumers spending more on services than actual goods is essentially capping the rate of North Carolina's GDP growth. Connaughton used an iPhone as an example. People are spending more on the phone service and apps than they pay for the phone.
The state is adding jobs in service industries in metro areas, but they are low productivity jobs. While rural areas in North Carolina, which are predominantly goods-producing areas with high pay and high productivity, are simply losing jobs.
“As those goods producing jobs are going away, they're not being replaced in rural areas by service jobs,” Connaughton said.
Overall, North Carolina's economy is expected to continue steady growth. But it's expected to be slow growth.
“The problem here is that service industries pay less than manufacturing industries. And that's probably one of the big reasons we’re seeing real stagnant wage growth,” Connaughton said. “We’re going through another transition, another period of time, where we're moving from producing goods to producing services."
North Carolina's GDP is forecast to grow 2.4%, over the 2016 level. The state is expected to gain 75,200 net jobs, during the year.