Second Quarter Report MAY19,2025
FORECAST HIGHLIGHTS
•For 2024, NORTH CAROLINA real GDP increased by 3.7 percent over the 2023level.
•Twelve ofthe state’s fifteeneconomic sectors experiencedoutput increases during 2024. The sectors with the strongest growth rates were agriculture with a real increase of 40.2 percent; retail trade with a real increase of 10.0 percent; mining with a real increase of 8.4 percent; construction with a real increase of6.4percent;nondurablegoodsmanufacturingwith arealincrease of 5.8 percent; educational and health services with a real increase of 5.8 percent; finance,insurance, and realestate (FIRE) with a realincrease of4.3 percent;andinformationwitharealincreaseof3.7percent.
•For 2024, NORTH CAROLINA establishments added 47,200 net jobs during theyear,anincreaseof0.9percent.
•For2025,NORTHCAROLINArealGDPisforecast toincrease by2.7percent overthe2024level.
•Allfifteenofthe state’s economic sectorsareexpected toexperienceoutput increases during 2025.Thesectorswith the strongestgrowthprojected rates are agriculture with a real increase of 27.2 percent, information with a real increase of 5.3 percent, retail trade with a real increase of 3.9 percent, nondurable goods manufacturing with a real increase of 3.3 percent, mining witharealincrease of2.9percent,educationalandhealthserviceswithareal increaseof2.8percent,businessandprofessionalserviceswitharealincrease of2.8percent,andconstructionwitharealincreaseof2.7percent.
•For2025,NORTHCAROLINAestablishments areforecasttoadd72,400 net jobs,anincreaseof1.4 percent.
•By December of 2024, the state’s unemployment rate was steady at 3.7 percent.
Quarterly Growth Rates in Real GDP
2024 GDP
Gross Domestic Product (GDP) reached a level of $839,122.2 million in 2024. Real (inflation-adjusted) GDP increased by 3.7 percent over the 2023 level. This growth in 2024 will represent the fourth full year of growthsinceCOVID-19.
For 2024, first quarter GDP increased by an annualized real rate of 2.9 percent. Duringthe second quarter, GDP increased byanannualized real rate of 3.5 percent. In the third quarter, GDP increased by an annualized realrateof3.9percent. Inthefourthquarterof2024,GDPincreasedbyan annualizedrealrateof3.1percent.
2024 Highlights
Hurricane Helene was a major factor in slowing the growth during the fourthquarterof2024. Inadditiontothe slow overallstategrowthinthe fourth quarter, we also have seen a significant decline in establishment employment inOctober. Total NorthCarolinaestablishmentemployment dropped by 7,200 jobs in October compared to September. Employment bouncedbackinNovember,butthehurricane’simpactaffectedtheoverall employmentgrowthfortheyear. Thestateonlyadded47,200jobsduring 2024. Clearly, Western North Carolina has been severely impacted and thathasspilledovertothestateeconomicperformance.
Recoveryisgoingtotakealongtimebecauseofthe natureofthe damage. Unlikecoastalareasmostbusinessesandhouseholdsinthewesternpartof the state donot havefloodinsurance. Normallyrebuilding afteranatural disaster stimulates the economy, but in this case the lack of insurance could both puta burden onsmall business and householdsand delay the rebuildingstimulusontheeconomy.
Inadditiontothehurricaneimpactonthestate’seconomyduring2024,we also had uncertain Fed policy. After two reductions in the Federal funds rateinthe fall,theFedhasbeenunclearonratepolicygoingforward. This uncertaintywilllikelyhaveasignificantimpactinearly2025dependingon futureFedpolicy.
2024 Total Real GDP Growth 3.7%
2024 GDP SECTOR ANALYSIS
Thecharttotheleftpresentsthe projected contributionsofeachmajor economicsectortoNorthCarolina’sGrossDomesticProduct(GDP).The real(inflation-adjusted) growthratefor2024increasedby3.7percent. Real growthrates foreachsector (displayed in blacktype) areplotted on the horizontal axis. Percentages of GDP contributed by each sector (displayed ingreentype) areplotted onthe vertical axis.Theresulting rectangles show the weighted importance of each sector’s growth during2024.Allofthe sector informationpresentedinthe tabletothe left is based on the North American Industry Classification System (NAICS)definitions.
Twelve of the state’s fifteen economic sectors experienced output increases during 2024. The sectors with the strongest growth rates wereagriculturewitharealincreaseof40.2percent;retailtradewitha realincreaseof10.0percent;miningwitharealincreaseof8.4percent, construction with a real increase of 6.4 percent; nondurable goods manufacturing with a real increase of 5.8 percent; educational and health services with a real increase of 5.8 percent; finance, insurance, and real estate (FIRE) with a real increase of 4.3 percent; and informationwitharealincreaseof3.7percent.
Fourothersectorsexperiencedgrowthrates,atlevelsbelowtheoverall 3.7 percent GDP real growth rate. These sectors were hospitality and leisure serviceswith a realincrease of2.3 percent, government with a real increase of 2.3 percent, business and professional services with a realincreaseof2.1percent,andwholesaletradewitharealincreaseof 1.2percent.
Three sectors experienced a decline in output during 2024. These sectors were transportation, warehousing, and utilities (TWU) with a realdecrease of2.1 percent; other serviceswith a realdecrease of1.7 percent; and durable goods manufacturing with a real decrease of 1.2 percent.
Quarterly Forecasted Growth Rates in Real GDP
2025 GDP 2025 Highlights
Gross Domestic Product (GDP) should reacha levelof$887,781.8 million in 2025. Real (inflation-adjusted) GDP is expected to increase by 2.7 percent over the 2024level. This growth in 2025willrepresentthe fifth fullyearofgrowthsinceCOVID-19.
For 2025, first quarter GDP is expected to increase byan annualized real rateof2.4percent. Duringthesecondquarter,GDPisexpectedtoincrease by an annualized real rate of 2.0 percent. In the third quarter, GDP is expected to increase by an annualized real rate of 2.1 percent. In the fourthquarterof2025, GDPisexpected toincrease byanannualized real rateof1.9percent.
For2025,therearesomebigquestions.Whatwillbethe effectofthe new administration? Will there be a recession or a boom? The recession question will be complicated by three issues. First, will fiscal policy by Congress and the President continue to fight the Fed, and its attempt to slow inflation, second, will the new administration be successful in implementing itssupply sideagenda andretain the 2017Trumptaxcuts, or will Washington bog down in partisan politics, and third, what impact willtariffshaveontheU.S.economy?
Inaddition tofiscalpolicy concerns, wehaveseenthe U.S.unemployment raterisefrom3.3percentinMayof2023to4.2percentinMarchandApril of 2025. As a result of the weakness in the labor market, the Fed began reducing interest rates in September of 2024. By December of 2024 the Fed Fundsrate droppedby100basis points. During2025, dependingon economic data, the Fed couldcontinuewith interestrate reductions byup to another 50 basis points by year-end. However, if Congress does not begintocontrolfiscalspending,wearelikelytoseeareturnofinflationin 2025, which could disrupt the Fed’s plans. The wild card in all ofthis is tariffs, which could slow the economy further and cause a mild bump in inflationintheshortrun. Theeconomicdataoverthenextseveralmonths will play a pivotal role in determining Fed interest rate policy and the balancebetweenareturnofinflation,arecession,oraboom.
2025 GDP SECTOR ANALYSIS
Thecharttotheleftpresentsthe projected contributionsofeachmajor economicsectortoNorthCarolina’sGrossDomesticProduct(GDP).The real (inflation-adjusted) growth rate for 2025 is projected to increase 2.7percent. Realgrowthratesforeachsector(displayedinblacktype) are plotted on the horizontal axis. Percentages of GDP contributed by each sector (displayed in green type) are plotted on the vertical axis. Theresultingrectanglesshowtheweightedimportanceofeachsector’s expectedgrowthduring2025.Allofthesectorinformationpresentedin the table to the left is based on the North American Industry ClassificationSystem(NAICS)definitions.
All fifteen of the state’s economic sectors are expected to experience output increases during 2025. The sectors with the strongest growth rates are agriculture with a real increase of 27.2 percent, information witharealincreaseof5.3percent,retailtradewitharealincreaseof3.9 percent, nondurable goods manufacturing with a real increase of 3.3 percent, mining with a real increase of 2.9 percent; educational and health services with a real increase of 2.8 percent, business and professional services with a real increase of 2.8 percent, and constructionwitharealincreaseof2.7percent.
Seven other sectors are expected to experience growth rates, at levels below the overall 2.7 percent GDP real growth rate. These sectors are hospitality and leisure services with a real increase of 2.2 percent; governmentwith arealincrease of2.1percent;finance,insurance,and real estate (FIRE) with a real increase of 2.0 percent; transportation, warehousing, and utilities (TWU) with a real increase of 1.7 percent; wholesale trade with a real increase of 1.4 percent; durable goods manufacturing with a real increase of 0.7 percent; and other services witharealincreaseof0.5percent.
2024 EMPLOYMENT
The sector employment analysis presented on this page is based on the North American Industrial Classification System (NAICS). North Carolinaemploymentreached5,044,300personsinDecember2024,a 0.9 percent increase over the December 2023employment level. The stateadded47,200netjobsin2024.
Six of the state’s fourteen nonagricultural sectors of the economy experiencedemploymentincreasesduring2024. Thesectorswiththe strongest employment increases in 2024 were education and health servicesat3.4percentandGovernment3.0percent.
2024 Employment Highlights
2025 EMPLOYMENT
The sector employment analysis presented on this page is based on the North American Industrial Classification System (NAICS). North Carolina employment is expected to reach 5,116,700 persons by December 2025, a 1.4 percent increase over the December 2024 employment level. The state is expected to add 72,400 net jobs in 2025.
Twelveofthe state’s fourteennonagricultural sectorsofthe economy are expected to experience employment increases during 2025. The sectors with the strongest projected employment increases in 2025 are information at 4.2 percent, education and health services at 2.2 percent,andconstructionat2.2percent.
2025 Employment Highlights
*Thousandsofpersons
2024-2025 NORTH CAROLINA UNEMPLOYMENT RATE
FORECAST reports historical seasonally adjusted monthly unemployment rates for North Carolina and the United States and forecasts the seasonally adjusted monthly unemployment rate for North Carolina. The seasonal adjustment accounts for variationsinlabormarketconditionsthatcauseregularfluctuationsintheunemploymentleveleachmonth.
Thegraphatthetopofthispageprovidesasummaryofthemonthlyunemploymentratesfor2024and2025. Thesolidblueline represents the United States seasonally adjusted historic unemployment rate. The seasonally adjusted unemployment rate for North Carolina is represented by the solid green line. The North Carolina seasonally adjusted unemployment rate forecast is representedbythesolidredline.TheseasonallyadjustedratesfortheUnitedStatesandNorthCarolinacanbecompareddirectly andprovidemorereliableestimatesthantheunadjustedrates.
TheUnitedStatesandNorthCarolinastarted2024withunemploymentratesof3.7percentand3.5percentrespectively.TheU.S. unemploymentratehasbeenincreasingthroughthefirsthalfof2024andendedtheyearat4.1percent. TheNorthCarolinarate hasremainedbelowthe U.S.rateduringallof2024andnow standsat3.7percent. However,the NorthCarolinarate islikelyto increaseduring2025to4.2percentbyDecemberof2025.
2026 OUTLOOK
Gross StateProduct (GSP) is expected to reach a level of $937,560.5 millionin2026. Real(inflationadjusted)GDPisexpectedtoincrease by2.1percentoverthe2025level. Thisgrowthin2026wouldfollow 2.7 percent growth in 2025and result in the sixthyear of economic growthfortheNorthCarolinaeconomysincethepandemicrecession in2020. TheNorthCarolinaeconomyisexpectedtoadd80,900jobs in 2026, with the unemployment rate around 4.3 percent through December2026.
2026 GDP Highlights
2026 Employment Highlights
TotalEstablishment Employment
Second Quarter Report MAY19,2025