When the Wall Street house of risk came crashing down in 2007, it wrecked local economies across North Carolina. Business finance dried up, people and businesses bought less, home values took a hit, and so employment dropped, sharply. Along with the rest of the U.S., we have seen the worst days of the recession pass and some stability and growth return. Business credit is still tight, consumer spending looks to be getting stronger, and the housing market is definitely on the rise again, but employment has been very slow to grow.
We’ve heard a lot about the “Carolina Comeback” recently, and expect to hear even more during 2015. The story generally goes that slashing state taxes and spending has resurrected an economy that was broken by federal policy, not to mention a century of democratic rule in the legislature. The problem with this story is that the comeback is a national one, most of which has nothing to do with changes to North Carolina policy. A far better explanation, as can be seen in the charts below, is that the current recovery is neither robust nor unique to North Carolina, but instead follows the national and regional trajectory.
Compared to the previous three major recessions, the current recovery has been stubbornly sluggish. It took more than five years for our state to get the jobs that were lost during the recession back, where the damage from the previous three recessions was repaired in less than half that time.
If the first chart looks familiar, it should. National employment trends over the last several recessions look very similar to what we have seen in North Carolina. This brings us to the second problem with the Carolina Comeback myth, it is not a Carolina story.
As can be seen below, North Carolina employment has generally followed the same trend as other states in the southeast. From 2000 on, the share of working age people who have employment has declined, with a particularly sharp drop in 2008 and 2009 as the Great Recession hit. Over the last few years, employment growth in North Carolina has been modestly stronger than most states in the Southeast, but even after these comparatively strong years, North Carolina remains decidedly middle of the pack.
All told, there just isn’t much real evidence of a distinctly Carolina Comeback. The recovery has been agonizingly slow in North Carolina as it has been across the country. Credit and blame do not have a home address, they knock on many doors and visit many living rooms. We have a lot to do as a state and as a country to adapt to the 21st century economic system. Moving into 2015, we should focus on what can be done to address the problems that remain, rather than trying to wish them away with nice sounding phrases.