NC economy can recover this year as long as COVID tamed, UNCC professor says
The North Carolina economy will roar back and grow at an unprecedented rate in 2021, UNC Charlotte professor John Connaughton predicted.
At Connaughton’s quarterly economic forecast Friday, the longtime local financial economics professor said North Carolina would have more jobs at the end of this year than it had at the end of 2019. That would entail a nearly full economy recovery from the recession caused the coronavirus.
The recovery in 2021, though, will be almost entirely dictated by how the state and nation handles the pandemic.
“The coronavirus dominated the economic picture in 2020, and the coronavirus will dominate the economic picture in 2021 as well,“ Connaughton said in a webcast.
The recession
The North Carolina economy shrunk as the pandemic shuttered hotels, bars and restaurants. Business travel stopped. Unemployment hit a peak of 13.5% in the state. Hundreds of thousands were out of work.
Over 870,000 confirmed cases of COVID-19 have been documented in North Carolina since the pandemic began last March. As of Friday, 11,446 people have died in the state from the disease.
The recovery since then has been lumpy.
While industries like finance were easily able to transition to work from home, hospitality and leisure were devastated. People did not take vacations. As of the fourth quarter, employment in that sector in Charlotte was still down 24%, according to data from the Charlotte Regional Business Alliance.
Unemployment in North Carolina will be 5.2% at the end of the year, compared to 3.5% at the end of 2019, according to Connaughton. A substantial amount of the state will still be out of work, even if much of the state is vaccinated by the end of the year.
“There are probably two different stories depending on where you started in the pandemic. Some people are really just doing really fine,” said Shante Williams, board chair of the Charlotte Mecklenburg Black Chamber of Commerce. The middle class, office workers and the established business have been able to weather the storm for the most part.
Those more marginally attached to the economy have seen things get progressively worse, she said. People who were struggling to maintain stable employment prior to the pandemic have faced greater challenges as hundreds of thousands of new job-seekers emerged.
While Williams believes continued aid is needed to help those who are still struggling or out of work, Connaughton worried that the stimulus package under debate in Congress may not be needed to grow the economy.
Future hiccups
North Carolina’s state gross domestic product will grow 5.1% this year, according to Connaughton’s forecast. And while he says the recovery will be “pretty darn quick,” there are still potential stumbling blocks ahead.
Ultimately, people need vaccines, he said.
Over 1.7 million people in North Carolina, about 17% of the state, have received their first dose of a COVID-19 vaccine as of Friday. Millions more vaccinations are needed for activities like business travel to restart, but Connaughton said some groups are beginning to discuss holding in-person conferences again.
“The virus will determine how this plays out,” Connaughton said.
