CHARLOTTE – North Carolina’s economy is recovering slowly from the COVID-19 pandemic, but jobs are lagging and other states are doing much better, according to a new report.
“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,” said John Connaughton, the Barings Professor of Financial Economics at the University of North Carolina at Charlotte, who delivered the Barings/UNC Charlotte Economic Forecast virtually on Friday.
“We’ve added more than half a million jobs in two months,” he added. “This is not trending in the wrong direction. It is trending in the right direction.”
But for the U.S. economy to get back to where it was before the pandemic, the nation needs to regain another 9.5 million jobs.
Economists warn some of those jobs may not come back, and workers will need to consider retraining for a new job that is in demand.
Wake Technical Community College specializes in working with local employers in industries that are growing and need more workers. The college builds programs to teach students what they need to know to take those positions.
“We were created for moments like this,” Wake Tech President Scott Ralls said.
Ralls said jobs are available in fields like life sciences, web development, health care and construction.
“There are certain jobs that go away. Then there are certain jobs that come to the forefront,” he said.
Rose Wallace’s job didn’t go away during the pandemic, but she still felt she needed a change in careers. Now, she’s about to finish up her classes and has an internship with a software development company that she hopes will turn into a permanent job.
“There is a lot of people who are making career shifts,” Wallace said. “I had to let go of that old identity, and it was painful but totally doable.”
Wallace called overcoming the fear of starting over in a new career “a mind game.”
“That is the big barrier,” she said. “It is an identity game, especially if you are switching careers, if you had a career and you have been in it for a while.”
Unemployment in North Carolina in February 2020 was 3.6 percent, and unemployment peaked at 13.5 percent during the early months of the pandemic. The state’s current unemployment rate is 6.1 percent. That ranks 28th in the United States, said Connaughton, noting that the state – the ninth largest in terms of population – is in the “middle of the pack in terms of employment recovery.”
In all, North Carolina lost 190,700 jobs in 2020.
Despite the job losses and the pandemic, North Carolina’s 2020 annual GDP growth rate was “only down 2.6 percent for the year,” Connaughton said.
The economy recovered in the third and fourth quarters, after a growth rate of negative 31 percent in the second quarter of 2020, he said. Yet, despite that, “North Carolina turned out to be the 12th best in terms of return.”
The data shows that the state’s economy, based on GDP, is almost back to 98 percent of where it was prior to the pandemic.
“We’ve done really well in terms of output, in GDP, but not as well in returning employment,” said Connaughton.
He is forecasting the state’s economy to grow this year, with a net gain of 199,300 jobs and a total employment growth rate of 4.5 percent, including a 15 percent predicted increase in the hospitality and leisure services industry. Nine sectors in the state are predicted to have more jobs at the end of 2021 than each had in February 2020.
“The unemployment rate will be trending down, and by the end of 2021, we expect to be at five percent,” Connaughton said. “Getting back to 5 percent, essentially 10 months from now, is a pretty darn quick recovery.
“By the end of December, we expect to get back 99.9 percent of the jobs back from where we were in February 2020.”
But that’s predicated on a strong second quarter, which relies on how quickly the state and the nation reach herd immunity, said Connaughton.
“The problem we’ve got, of course, is mutations, and a potential COVID spike as we’ve seen in November through January,” he said.
The hospitality and leisure services sector in North Carolina has been hit the hardest, in terms of the state’s unemployment, said Connaughton.
“Two sectors that have had the worst declines, due to the pandemic, are leisure and hospitality services, and other services,” he said. “Almost 50 percent of the job losses were in these two sectors in North Carolina.”
Connaughton’s data shows that hospitality and leisure services employment was down 27.6 percent 2020. Yet, he is forecasting a 15 percent employment growth rate in that sector for 2021.
Mike Walden, an economist at North Carolina State University, isn’t so sure.
“In some key areas, like restaurants and hospitality and travel, I do not think all of those jobs are coming back,” Walden said.
There are potential long-term impacts on certain industries, cautioned Connaughton, and those impacts largely depend on consumer confidence.
Industries like brick-and-mortar retail stores have already suffered and may continue to feel the impact of shifting trends in purchasing due to the pandemic, said Connaughton.
“The truth of the matter is that the pandemic accelerated a trend that had been going on for a long time,” he said. “The trend line is going to continue, rather than return.”
Other industries that may see long-term impacts include travel, mass transit, conference hotels and conventions and travel resorts, he said.
A program called WakeWorks Propel was created to help students in a financial bind pay for their training in accelerated courses that last up to six months. Ralls said Wake Tech also can help students worried about supporting a family while the learn.
“There is much more possible than most people will think,” Ralls said.