Agenda - 02-21-2017-13-5 - Information Item - Memorandum - Second Quarter FY2016-17 Financial Report - Period Ending December 31, 2016

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22 The North Carolina Economy: Uneven Growth Continues Table 2 shows North Carolina enjoyed a positive year in 2016 for four top economic measures. There were gains in real GDP, the labor force, payroll jobs, and the real(inflation- adjusted) wage rate, and each of these gains exceeded their counterparts at the national level. Although the state did perform better than the nation in 2016, there is concern over recent trends. Figure 1 shows North Carolina's rebound from recessions has become progressively less robust during the last three business cycles. For example, 2016 is the seventh year of recovery from the Great Recession, and the state's real GDP in 2016 was 8% higher than at the beginning of the recovery. But the comparable gain following the 2001 recession was 19%, and following the 1990-91 recession it was 36%.1 Furthermore, Figure 2 shows the state's recovery compared to the national recovery has narrowed over the last three recessions —indeed in the current recession it has been slower than the national recovery. A major reason for North Carolina's relatively slower growth in the current economic recovery is shown in Table 3. Compared to the nation, North Carolina has had significantly slower growth in several high productivity sectors —including utilities, finance, nondurable manufacturing, and agriculture— and faster growth in low productivity sectors like arts/leisure/hospitality,personal services, and administrative services. In particular, the decline in the state's non-durable manufacturing sector, once a mainstay of the North Carolina economy, has been more than four times greater than the sectors' downsizing at the national level in the current economic expansion. This contrast suggests the economic transformation in North 1 The comparison to the 2001 recession is for the sixth year,the last year of that's cycle's recovery. 7