September 16, 2025
FORECAST H IGHLIGHTS
• For 2025, NORTH CAROLINA real GDP is forecast to increase by 2.3 percent over the 2024 level.
• Ten of the state’s fifteen economic sectors are expected to experience output increases during 2025. The sectors with the expected strongest growth rates are agriculture with a real increase of 34.0 percent; information with a real increase of 7.3 percent; retail trade with a real increase of 3.1 percent; government with a real increase of 2.8 percent, educational and health services with a real increase of 2.6 percent; nondurable goods manufacturing with a real increase of 2.6 percent; and construction with a real increase of 2.5 percent.
• For 2025, NORTH CAROLINA establishments are forecast to add 76,400 net jobs, an increase of 1.5 percent.
• For 2026, NORTH CAROLINA real GDP is forecast to increase by 2.1 percent over the 2025 level.
• All fifteen of the state’s economic sectors are expected to experience output increases during 2026. The sectors with the strongest growth rates are information with a real increase of 3.9 percent, agriculture with a real increase of 3.8 percent, mining with a real increase of 3.5 percent, construction with a real increase of 2.6 percent, educational and health services with a real increase of 2.4 percent, other services with a real increase of 2.3 percent, business and professional services with a real increase of 2.2 percent, and hospitality and leisure services with a real increase of 2.1 percent.
• For 2026, NORTH CAROLINA establishments are forecast to add 80,850 net jobs, an increase of 1.6 percent.
• By December of 2026, the state’s unemployment rate is expected to increase to 4.1 percent.
2025 Highlights
Current Dollars
Total Gross Product
Constant (2012 Dollars)
Total Gross Product
2025 GDP
Gross Domestic Product (GDP) is expected to reach a level of $884,127.3 million in 2025. Real (inflation-adjusted) GDP is expected to increase by 2.3 percent over the 2024 level. This growth in 2025 will represent the fifth full year of growth since COVID-19.
For 2025, first quarter GDP increased by an annualized real rate of 0.8 percent. During the second quarter, GDP is expected to increase by an annualized real rate of 2.2 percent. In the third quarter, GDP is expected to increase by an annualized real rate of 2.1 percent. In the fourth quarter of 2024, GDP is expected to increase by an annualized real rate of 1.9 percent.
Hurricane Helene was a major factor in slowing the growth during the fourth quarter of 2024. In addition to the slow overall state growth in the fourth quarter, we also have seen a significant decline in the growth of establishment employment during the past year. The state only added 47,200 jobs during 2024. Clearly, Western North Carolina has been severely impacted and that has spilled over to the overall state economic performance.
Recovery in Western North Carolina is going to take a long time because of the nature of the damage. Unlike in coastal areas, most businesses and households in the western part of the state do not have flood insurance. Normally rebuilding after a natural disaster stimulates the economy, but in this case the lack of insurance could both put a burden on small business and households and delay the rebuilding stimulus on the economy.
In addition to the hurricane impact on the state’s economy during 2024, we are also going through a period of uncertain Fed policy. After three reductions in the Federal funds rate in the fall of 2024, the Fed has been unclear on rate policy going forward. This uncertainty has shown a significant impact in early 2025 and because of policy lag will likely continue through the end of the year. Right now the Fed is facing conflicting goals as inflation has remained sticky and the employment picture is beginning to weaken.
2025 GDP S ECTOR A NALYSIS
The chart to the left presents the projected contributions of each major economic sector to North Carolina’s Gross Domestic Product (GDP). The real (inflation-adjusted) growth rate for 2025 increased by 2.3 percent. Real growth rates for each sector (displayed in black type) are plotted on the horizontal axis. Percentages of GDP contributed by each sector (displayed in green type) are plotted on the vertical axis. The resulting rectangles show the weighted importance of each sector’s growth during 2025. All of the sector information presented in the table to the left is based on the North American Industry Classification System (NAICS) definitions.
Ten of the state’s fifteen economic sectors are expected to experience output increases during 2025. The sectors with the expected strongest growth rates are agriculture with a real increase of 34.0 percent; information with a real increase of 7.3 percent; retail trade with a real increase of 3.1 percent; government with a real increase of 2.8 percent, educational and health services with a real increase of 2.6 percent; nondurable goods manufacturing with a real increase of 2.6 percent; and construction with a real increase of 2.5 percent.
Three other sectors are expected to experience growth rates, at levels below the overall 2.3 percent GDP real growth rate. These sectors are business and professional services with a real increase of 2.2 percent; finance, insurance, and real estate (FIRE) with a real increase of 2.1 percent; and hospitality and leisure services with a real increase of 0.5 percent.
Five sectors are expected to experience a decline in output during 2025. These sectors are mining with a real decrease of 2.3 percent; transportation, warehousing, and utilities (TWU) with a real decrease of 1.8 percent; other services with a real decrease of 0.7 percent; durable goods manufacturing with a real decrease of 0.4 percent; and wholesale trade with a real decrease of 0.1 percent.
Quarterly Forecasted Growth Rates
2026 GDP
Gross Domestic Product (GDP) should reach a level of $933,820.1 million in 2026. Real (inflation-adjusted) GDP is expected to increase by 2.1 percent over the 2025 level. This growth in 2026 will represent the sixth full year of growth since COVID-19.
For 2026, first quarter GDP is expected to increase by an annualized real rate of 1.9 percent. During the second quarter, GDP is expected to increase by an annualized real rate of 2.2 percent. In the third quarter, GDP is expected to increase by an annualized real rate of 2.3 percent. In the fourth quarter of 2025, GDP is expected to increase by an annualized real rate of 2.6 percent.
2026 Highlights
Current Dollars
Total Gross Product
Constant (2012 Dollars)
Total Gross Product
For 2026, there are some big questions. What will be the effect of the new administration? Will there be a slow down, 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 its supply side agenda retaining the 2017 Trump tax cuts, or will Washington bog down in partisan politics; and third, what impact will tariffs have on the U.S. economy?
In addition to fiscal policy concerns, we have seen the U.S. unemployment rate rise from 3.3 percent in May of 2023 to 4.3 percent in August 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 Funds rate dropped by 100 basis points. During 2025, depending on economic data, the Fed could continue with interest rate reductions by up to another 50 to 75 basis points by year-end. However, if Congress does not begin to control fiscal spending, we are likely to see a return of inflation in 2026, which could disrupt the Fed’s plans. The wild card in all of this is tariffs, which could slow the economy further and cause a mild bump in inflation in the short run. The economic data over the next several months will play a pivotal role in determining Fed interest rate policy and the balance between a return of inflation, a slowdown, a recession, or a boom.
2026 GDP S ECTOR A NALYSIS
The chart to the left presents the projected contributions of each major economic sector to North Carolina’s Gross Domestic Product (GDP). The real (inflation-adjusted) growth rate for 2026 is projected to increase 2.1 percent. Real growth rates for each sector (displayed in black type) are plotted on the horizontal axis. Percentages of GDP contributed by each sector (displayed in green type) are plotted on the vertical axis. The resulting rectangles show the weighted importance of each sector’s expected growth during 2026. All of the sector information presented in the table to the left is based on the North American Industry Classification System (NAICS) definitions.
All fifteen of the state’s economic sectors are expected to experience output increases during 2026. The sectors with the strongest growth rates are information with a real increase of 3.9 percent, agriculture with a real increase of 3.8 percent, mining with a real increase of 3.5 percent, construction with a real increase of 2.6 percent, educational and health services with a real increase of 2.4 percent, other services with a real increase of 2.3 percent, business and professional services with a real increase of 2.2 percent, and hospitality and leisure services with a real increase of 2.1 percent.
Seven other sectors are expected to experience growth rates, at levels below the overall 2.1 percent GDP real growth rate. These sectors are government with a real increase of 1.9 percent; retail trade with a real increase of 1.8 percent; wholesale trade with a real increase of 1.9 percent; durable goods manufacturing with a real increase of 1.9 percent; finance, insurance and real estate (FIRE) with a real increase of 1.8 percent; transportation, warehousing and utilities (TWU) with a real increase of 1.7 percent; and nondurable goods manufacturing with a real increase of 1.3 percent.
2025 E MPLOYMENT
The employment sector analysis presented on this page is based on the North American Industrial Classification System (NAICS). North Carolina employment will reach 5,120,700 persons in December 2025, a 1.5 percent increase over the December 2024 employment level. The state is expected to add 76,400 net jobs in 2025.
Eleven of the state’s fourteen nonagricultural sectors of the economy are expected to experience employment increases during 2025. The sectors with the strongest employment increases in 2025 were construction at 3.6 percent and
and
at 2.8 percent.
Thousands of persons
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 5,201,550 persons by December 2026, a 1.6 percent increase over the December 2025 employment level. The state is expected to add 80,850 net jobs in 2026.
All of the state’s fourteen nonagricultural sectors of the economy are expected to experience employment increases during 2026. The sectors with the strongest projected employment increases in 2026 are information at 5.5 percent, education and health services at 4.9 percent, and business and professional services at 1.6 percent.
Thousands of persons
2025 -2026 NORTH CAROLINA UNEMPLOYMENT RATE
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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 variations in labor market conditions that cause regular fluctuations in the unemployment level each month.
The graph at the top of this page provides a summary of the monthly unemployment rates for 2025 and 2026. The solid blue line 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 represented by the solid red line. The seasonally adjusted rates for the United States and North Carolina can be compared directly and provide more reliable estimates than the unadjusted rates.
The United States and North Carolina started 2025 with unemployment rates of 4.0 percent and 3.7 percent respectively. The U.S. unemployment rate has been increasing through the first half of 2025 reaching 4.3 percent by August. The North Carolina rate has remained below the U.S. rate during all of 2025 and now stands at 3.7 percent. However, the North Carolina rate is likely to increase during 2025 and 2026 to 4.1 percent by December of 2026.