After a year of uncertainty due to the global COVID-19 pandemic, North Carolina’s economy will continue to rebound in 2021, according to John Connaughton, director of the UNC Charlotte Economic Forecast.
“The good news is the fourth quarter COVID virus spike seems to be subsiding,” said John Connaughton, professor of financial economics at the Belk College of Business. “As vaccination rates rise and the weather starts to warm, it is likely that for a while the COVID-19 virus will not be a driving force in the economy.”
Connaughton, who released his first quarter UNC Charlotte Economic Forecast Report on Friday, March 5, said among the factors he is watching are the new stimulus package and the impact vaccinations will have on the economy during the second and third quarters.
Gross State Product Analysis
North Carolina’s real, adjusted Gross State Product (GSP) should recover to pre-pandemic levels by the second quarter of 2021, according to the report.
For 2021, Connaughton forecasts an output increase for 14 of the state’s 15 economic sectors.
These sectors will see the largest inflation-adjusted output increases in 2021:
- Hospitality and Leisure Services: 15.2%
- Agriculture: 9.2%
- Educational and Health Services: 7.2%
- Retail Trade: 6.7%
- Durable Goods: 6.0%
- Information: 5.9%
Mining is the only sector forecast to decline with an expected decrease of 2.5%.
Employment
Employment levels and the unemployment rate will take much longer to recover than the GDP, Connaughton said. North Carolina nonagricultural employment should return to pre-pandemic levels by December.
North Carolina employment is expected to reach 4,602,500 by December, an increase of 4.5% over December 2020. The state is expected to add 199,300 net jobs in 2021.
All 14 of the state’s nonagricultural sectors of the economy are expected to experience employment increases during 2021. These sectors are expected to have the strongest increases for the year:
- Information: 16.0%
- Hospitality and Leisure Services: 14.9%
The North Carolina unemployment rate, which peaked at 12.9% at the height of the pandemic shutdown in April 2020, should decline through the rest of the year and reach 5.2% by December. The state’s unemployment rate will not again return to full employment (4.0%) until late 2022.
The full report and a recording of the presentation will be available at belkcollege.uncc.edu/forecast. Connaughton will release the next UNC Charlotte Economic Forecast report on May 26.