University of North Carolina at Charlotte

NC Economic Forecast: Recovery Could Take Years

The North Carolina economy experienced its biggest decline since the Great Depression due to the COVID-19 pandemic

Newswise — Just three months ago, the United States was seeing its longest economic expansion on record, a period of growth that started in 2010 and continued through February 2020. 

“Just three months ago, our major worries were whether a looming trade war with China was going to slow the economy down in 2020,” said John Connaughton, Barings Professor of Financial Economics at UNC Charlotte’s Belk College of Business. “For the second quarter of the year, the North Carolina economy, like the U.S. economy, experienced its biggest decline in Gross State Product (GSP) since the Great Depression of the 1930s.” 

Connaughton, presenting the quarterly Barings/UNC Charlotte Economic Forecast on Thursday, May 28, offered a few scenarios for the remainder of 2020. 

“Going forward from the middle of 2020, the No. 1 question is how long before the economy gets back to its 2019 level and when does the unemployment rate again approach full employment,” Connaughton said. 
Given the hit the economy took during the second quarter of 2020, it is likely to take until mid-2022 before Gross Domestic Product (GDP) recovers, he said. The unemployment rate will take even longer, another six to nine months, before it drops below 5%, Connaughton added. 

North Carolina GSP
Inflation-adjusted real GSP is expected to decrease by 4.4% over the 2019 level, according to the report. Twelve of North Carolina’s 15 economic sectors are expected to experience output decreases during 2020, with the hospitality and leisure services sector seeing the largest decline, at 34.8%. 

Other sectors projected to decrease by over 5% are: 

  • Other services: -13.4% 
  • Construction: -8.8% 
  • Durable goods manufacturing: -7.0% 
  • Wholesale trade: -6.1% 
  • Educational and health services: -5.5% 

Only the agriculture and mining sector is expected to experience growth in 2020.

State Employment Numbers
By December, seasonally adjusted nonagricultural employment in North Carolina is expected to decrease by 6.5% over the employment level in December 2019, a loss of 300,000 net jobs during the year, according to Connaughton.

Twelve of the state’s 14 nonagricultural sectors of the economy are expected to experience employment decreases during 2020.  The sectors with the largest expected employment decreases in 2020 are:

  • Hospitality and leisure services: -25.8% 
  • Other services: -7.8% 
  • Retail trade: -7.0%
  • Transportation and warehousing: -7.3%
  • Manufacturing: -6.0%

According to the report, the North Carolina unemployment rate is expected to peak at 17.0% in May and be around 9.9% by December.

“Going forward, the one takeaway from this 10-year expansion is that the North Carolina growth rate over the period has trailed the U.S. 10-year average growth rate of 2.3%,” Connaughton said. “This is a consideration as we emerge from the COVID-19 shutdown. So, the big question is whether the North Carolina recovery will again be weaker than the U.S. recovery. This year and 2021 will be very interesting and very uncertain years.”

A Look Back
2019 represented the 10th and final year of the economic expansion following the Great Recession, the longest expansion on record since 1854.  

“It is very likely that this expansion would have continued through at least 2020 and probably well into 2021,” Connaughton said. “However, we will never know. We will look back on this 10-year expansion as a positive and interesting decade.”   

Due to the COVID-19 pandemic, the economic forecast was presented in a virtual format for the first time in its nearly 40-year history. The full report is available at The complete forecast video will be posted by Friday, May 29. Connaughton will release the next Barings/UNC Charlotte Economic Forecast report on Sept. 23. 

Connaughton is considered one of the top economists in North Carolina. He joined the UNC Charlotte faculty in 1978 and has served as director of the quarterly Barings/UNC Charlotte Economic Forecast since 1981. 


About the Belk College of Business
Accredited by AACSB International, the Belk College of Business at UNC Charlotte offers outstanding business education programs at the undergraduate, master’s, doctoral and executive levels. The Belk College is committed to building strong partnerships in the greater Charlotte region and beyond as a vital part of our mission as North Carolina's urban research business school. Find the Belk College of Business online at


About Barings
Barings is a global financial services firm with more than $227 billion in assets under management and over 2,000 associates who are dedicated to meeting the evolving investment and capital needs of the firm’s clients and customers. Through active asset management and direct origination, Barings provides innovative solutions and access to differentiated opportunities across public and private capital markets. The firm’s global headquarters is located at 300 South Tryon in Charlotte, and it maintains a strong international presence with business and investment professionals in offices throughout North America, Europe and Asia Pacific.

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