We’re getting ready to celebrate an anniversary, although I doubt any balloons will be popped or cake served. This summer will mark five years since the bottom of the economic recession. Since then our overall economy has improved. But what has the economic recovery looked like? Let’s look at some key economic measures to see whether we can come to a conclusion, particularly for North Carolina.
Production: The value of everything produced in the economy – including both goods and services – is called “gross domestic product” or GDP for short. This measure is considered the broadest indicator of any economy and is commonly used to rank countries and states by their economic size.
Unfortunately, GDP numbers come out with a time lag, so the most recent annual numbers for states are for 2012. Between 2009 and 2012, North Carolina’s GDP increased 5.6 percent, lower than the national 6.7 percent rate. Yet for 2012, our state’s growth rate of 2.7 percent exceeded the national increase of 2.5 percent.
However, the recent improvement in GDP is well below our long-run average. For example, from 1987 to 2007, North Carolina’s GDP increased at an average yearly rate of 4.8 percent. So our collective production has been increasing, but slowly.
Jobs: Of course, for most people, jobs are the No. 1 economic statistic. There’s no doubt the recession hit jobs hard – very hard. The nation lost 8.7 million payroll jobs during the recession, and North Carolina saw 335,000 jobs disappear. On a percentage basis, the job loss in our state was greater: 8 percent compared with 6 percent for the country.
The good news is that jobs have come back. Nationally, the latest data show we are only 100,000 jobs short of the pre-recession high. In North Carolina, we’re 60,000 jobs short. I expect both of these gaps to be made up this year.
Still, as with GDP, job growth has been slow by historic standards. Since the job market began improving four years ago, annual job growth has averaged 1.6 percent in North Carolina, slightly better than the 1.5 percent national rate. However, this is well below North Carolina’s usual pace. For example, in the decade of the 1990s, jobs increased an average of 2.4 percent each year. The conclusion once again is slow progress.
Unemployment rate: The so-called “headline” unemployment rate in North Carolina was 4.6 percent prior to the recession, peaked at 11.3 percent and now has declined over the last four years to April’s rate of 6.2 percent. Yet it is well-known that this rate has an asterisk. Individuals who want jobs but have not “actively” looked for work recently are not counted as unemployed.
Fortunately, there is an alternative jobless rate that does include these individuals as unemployed. The latest reading, which is an average for the latter part of 2013 and first part of 2014, stands at 8.6 percent in North Carolina, close to the comparable national rate of 8.5 percent. The measure topped out at 11.9 percent in our state, a full percentage point higher than the national peak. So the improvement in North Carolina has been somewhat faster. Both the North Carolina and national rates were near 5.5 percent prior to the recession.
Pay: The news on what we earn is not good. From the bottom of the recession in 2009 to today, average hourly earnings for private sector jobs in North Carolina rose 6.5 percent. This may sound OK, but over the same time inflation (the increase in prices of goods and services we buy) rose 11.2 percent. So after subtracting inflation, private sector workers in North Carolina are earning 4.7 percent less than they did five years ago.
We can hope that if employers begin to hire workers at a faster pace, inflation-adjusted pay will rise.
Regional differences: While most regions of the state have seen economic improvement, all are certainly not on the “same page,” economically speaking. The latest regional unemployment rates show nearly 5 percent in Asheville and the Triangle and only slightly higher rates in Charlotte, Burlington and Winston-Salem. But joblessness is still over 9 percent in Rocky Mount, Henderson, Lumberton and Roanoke Rapids. Clearly we don’t have consistent economic conditions across the state.
So how loudly should we celebrate the five-year anniversary past the recession’s bottom? I give it a “hip, hip,” but not yet a “hooray.”
Michael. L. Walden is a Reynolds Distinguished Professor at N.C. State University.