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2 <br /> <br />Statewide and Total Sector Trends <br /> Estimates for 2017 of the broadest measure of economic growth – real (inflation- <br />adjusted) Gross Domestic Product (GDP) - suggests North Carolina’s aggregate growth rate <br />again surpassed the national growth rate for the third straight year. However, the state’s growth <br />rate fell short of the real GDP growth rate for the Southeast (Figure 1). Also, since the state’s <br />population grew faster than the nation’s population, North Carolina’s growth rate per person (per <br />capita) was less robust. One estimate for 2017 shows the state’s real GDP growth rate per capita <br />the same as the national rate. <br /> An avidly debated issue is the impact of the significant tax rate reductions that began <br />implementation in 2014. For the five years from 2010 to 2014, North Carolina’s real GDP <br />growth rate fell short of the national rate in four of the years. But in the three years from 2015 to <br />2017, North Carolina’s growth rate consistently exceeded the national rate. There is some <br />research suggesting that reductions in a state’s income tax rate – especially the corporate tax rate <br />– can stimulate economic growth.1 However, an alternative explanation is that consumers’ slow <br />recovery from the Great Recession – especially in their spending on manufactured durable <br />goods- delayed the rebound in North Carolina’s manufacturing-heavy economy. <br /> <br />Figure 1. Real GDP Annual Growth Rate (%) in the North Carolina, US, and Southeast <br />States’ Economies, 2010-2017. <br /> <br />Source: U.S. Bureau of Economic Analysis. Data for 2017 are for Q2, 2016 to Q2, 2017. <br /> <br />1 Michael L. Walden, “Recovery from the Great Recession: Explaining the Differences among States,” Journal of <br />Regional Analysis and Policy, 44(2): 166-174, 2014. <br /> <br />-1 <br />-0.5 <br />0 <br />0.5 <br />1 <br />1.5 <br />2 <br />2.5 <br />3 <br />2010 2011 2012 2013 2014 2015 2016 2017 <br />% <br />NC US SE <br />9