Agenda - 02-16-2021; 12-3 - Memorandum - Financial Report-Second Quarter FY 2020-21

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Quarterly Growth Rates 2021 GSP 14 in Forecasted Real GSP 5 Gross State Product(GSP) is forecast to reach a level of$589,766.5 million in 2021. Real (inflation-adjusted) GSP is expected to increase by 4.5 4 percent over the 2020 level. This growth in 2021 will represent the first year of growth since Covid-19. 3 4.8 4.4 2 For 2021, first quarter GSP is expected to increase by an annualized real I I _J - - ill rate of 4.8 percent. During the second quarter, GSP is expected to increase 0 by an annualized real rate of 4.4 percent. In the third quarter, GSP is 2021 I 2021 II 2021 III 2021 IV expected to increase by an annualized real rate of 4.2 percent. In the fourth quarter of 2021, GSP is expected to increase by an annualized real rate of 2021 Highlights 3.6 percent. 2021 represents the first full year of the economic comeback from the 2021* Percent Covid-19 recession of 2020. The Covid-19 recession resulted in a more Current Dollars Change severe downturn than what we experienced during the Great Recession in Total Gross Product 589,766.5 5.2 2008. However, this recession is markedly different than any recession we Constant(2012 Dollars) have experienced. In most recessions, the cause comes from an imbalance Total Gross Product 517,942.7 4.5 in one or more sectors of the economy. In the Great Recession, it was the Agricultural 7,045.3 21•7 finance industry that almost collapsed in the fall of 2007 which led to the Mining 676.63 2.4 downturn. The 2001 recession was caused by investment overhang that Construction 17,638.3 3.6 Manufacturing 89,718.3 3.0 resulted from the Y2K buildup during 1998 and 1999. This recession was Durable Goods 40,546.8 2.7 cause by a mandated shutdown of many sectors of the economy. Nondurable Goods 49,171.5 3.2 TWU 19,761.7 3.3 What resulted was a very different looking decline. Normally, during a Wholesale Trade 30,906.1 4.8 Retail Trade 29,681.7 4.7 recession, GDP begins to fall, and 6-9 months later we see unemployment Information 23,789.3 6.0 begin to rise. During the recovery phase after a normal recession, GDP FIRE 95,213.6 3.1 begins to rise and the unemployment rate doesn't start to pickup until 6-9 B&P 70,356.7 4.6 months later. After that, it can take more than two years before the E&H 42,179.3 6•8 unemployment rate recovers. In the Covid-19 recession, the unemployment H&L 12,874.1 7.3 Services 9,370.9 5.6 rate was leading the downturn. In April of 2020, the North Carolina Government 68,728.2 4.3 unemployment rate jumped to 12.9 percent but by October, it had fallen back down to 6.3 percent. *Millions of dollars