Forecast: Possible economic slowdown could be ahead

Thursday, May 25, 2023

To better understand the direction North Carolina’s economy will take for the remainder of the year, watch closely what steps the Federal Reserve takes next month, said John Connaughton, professor of financial economics for UNC Charlotte’s Belk College of Business. 

Connaughton, who released the North Carolina Economic Forecast Second Quarter Report during a virtual presentation Thursday, May 25, said it’s still unclear if the Fed will raise or pause interest rates when it meets again June 13-14. 

“Either way, the recent trouble in the financial sector is slowing lending across all banks and helping the Fed in its inflation fight,” he said. “However, the net impact of increasing interest rates and reduced bank lending is creating uncertainty about the direction the U.S. economy is heading over the next couple of quarters.  It is quite possible we will see a mild slowdown during the second half of 2023.” 

Connaughton said the odds are tilting that there could be a recession near the end of the year. He gives it a 60/40 chance.

Gross Domestic Product Analysis
For 2023, North Carolina’s real (inflation-adjusted) GDP is forecast to increase by 1.4% over the 2022 level, according to the report. 

For the first quarter of 2023, GDP is expected to grow by an annualized rate of 1.1%. 

Connaughton expects an output increase for 12 of the state’s 15 economic sectors during 2023. The sectors with the strongest expected growth rates include: 

  • Agriculture: 15.4%
  • Information: 7.2%
  • Mining: 7.0%
  • Business and Professional Services: 4%
  • Educational and Health Services: 3.4%

Three sectors are expected to experience declines during 2023: 

  • Construction: -6.1%
  • Nondurable Goods Manufacturing: -5%
  • Finance, Insurance and Real Estate: -.01%  

According to the report, all 14 of the state’s nonagricultural sectors are expected to experience employment increases during 2023. The sectors with the strongest expected employment increases are: 

  • Mining: 5.6%
  • Information: 4.0%

North Carolina employment is expected to reach 4,930,800 persons by December 2023, a 1.6% increase over the December 2022 employment level. The state is expected to add 78,300 net jobs in 2023.

North Carolina’s unemployment rate, which started 2023 at 3.9%, should close the year at 4%. 

2024 Preview
Looking ahead to 2024, the report forecasts slow but continuing growth. The North Carolina economy is expected to add 53,400 jobs in 2024, maintaining the unemployment rate of around 4% through December 2024.

The North Carolina Economic Forecast, which debuted in 1982, is released quarterly. The full report and a recording of the presentation will be available at

The North Carolina Economic Forecast is supported by LPL Financial. The third quarter report will be released on Sept. 7.