Most states have still failed to recover the jobs lost during the depths of the COVID crisis in 2020. North Carolina is not, however, one of those states.
From February 2020 to February 2022, we experienced an employment increase of 1.5%, representing a net gain of 67,600 jobs. That ranks us 6th in job growth since the onset of COVID. Only 10 other states are in positive territory over the past two years: Utah (5.1%), Idaho (5.1%), Montana (3.1%), Texas (1.7%), Florida (1.7%), Arizona (1.3%), Georgia (1.2%), Tennessee (1.2%), Arkansas (0.9%), and Colorado (0.3%).
If we measure the recovery not by employment but by overall output, our state still fares well. According to the U.S. Bureau of Economic Analysis, North Carolina’s real GDP has grown by an annualized average of 1.7% since the start of 2020, faster than the Southeast (1.1%) and the nation as a whole (0.8%).
There’s no question our state suffered mightily during the COVID crisis. Hundreds of thousands of people lost jobs or incomes. Millions suffered unprecedented restrictions on their personal liberty. And more than 23,000 of our fellow North Carolinians lost their lives.
Whatever you think of the public-health benefits of the stringent executive orders Gov. Roy Cooper imposed during the first few months of the COVID crisis, they certainly had a substantial dampening effect on the state’s economy. I assume the governor would grant the existence of such a downside, arguing that achieving North Carolina’s lower-than-average death rates was worth the cost. Others might question whether the state’s mandates were really the main cause of those lower death rates.
As an economic matter, though, North Carolina clearly bounced back more strongly from the COVID recession than most states did. Why? I'll offer three possible (and not mutually exclusive) explanations.
First, our state and local governments were comparatively well-prepared. During much of the past decade, lawmakers had prudently increased state savings while making North Carolina a more attractive place to work, invest, and create jobs by reforming our tax code, regulatory process, and infrastructure programs. These policy decisions served as the equivalent of a giant neon sign with the words “Do Business Here!” and a giant arrow pointing to North Carolina.
So even as some industries were swooning — and some businesses such as downtown restaurants were closing their doors for good — other industries were in a position to expand once the worst of the crisis was over.
They were already in place in North Carolina or looking closely at the state for their next major investments.
A second explanation might be that our economy's exposure to a pandemic-induced downturn was somewhat lower than those of our peers because of differences in structure. A smaller share of our population lives in urban centers, for example. And tourism, while an important part of North Carolina’s service sector, doesn't make up as large a share of GDP as it does in, say, our neighbor South Carolina.
Finally, our state has what many households and businesses are looking for in COVID’s aftermath. Remote work has finally come into its own, freeing up some workers to choose homes and communities based on quality of life rather than proximity to downtown employment districts. While cross-state relocations don’t yet constitute a flood by historical standards, North Carolina is one of the most popular destinations for those looking to reinvent themselves — and their businesses — in more a more congenial clime.
To say North Carolina is bouncing back is not to say everyone is coming along for the bouncy ride. Too many displaced workers remain on the sidelines of the labor market. Beyond a couple dozen urban and suburban counties, many other parts of the state continue to face major economic development challenges. Furthermore, increased reliance on remote work brings costs as well as benefits. Some restaurants and service businesses catering to office workers may turn out to be unsustainable in their current form.
Nevertheless, things could be worse. In most of the country, in fact, they are.