Agenda -12-2 - Information Item - Memorandum - Second Quarter FY2017-18 Financial Report

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3 Figure 2. Economic Sector Growth Rate (%) in North Carolina, 2009-2017. Source: U.S. Bureau of Economic Analysis. Since the end of the Great Recession in mid-2009, economic growth has been uneven among North Carolina’s major sectors (Figure 2). Fastest growth has been in the Information, Professional and Business Services, and Leisure and Food Service sectors, while the slowest growth has been in the Education and Health Care, Construction, and Non-durable Manufacturing sectors. Indeed, output in Non-durable Manufacturing, which importantly includes tobacco manufacturing (primarily cigarettes), textiles, and apparel, has dropped almost 20% since the conclusion of the Great Recession. These results suggest the long-running restructuring of the North Carolina economy is continuing. Unfortunately, the decline in Non- durable Manufacturing has a disproportionate negative impact on small town and rural areas. As a result of its severe contraction during the Great Recession, the health of the residential housing market has been closely watched. Figure 3 shows a measure of residential housing market activity in years prior to the Great Recession (2004-2006), during the Great Recession (2007-2009), and in the recovery following the Great Recession (2010-2017). Residential construction activity in the state made a tepid rebound in the early years of the recovery, but since 2015 the pace of recovery has accelerated. Residential building permits in North Carolina in 2017 were the highest in a decade, although they were still well below the “boom” years of 2004-2006. -30 -20 -10 0 10 20 30 40 50 60 Non-durable manuf Construction Educ & health care Financial services Transp & warehousing Durable manuf Trade Farming & forestry Leisure & food service Prof & businsess serv Information % 9