North Carolina's strong economy enters into an uncertain 2025
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North Carolina remains on strong economic footing despite some uncertainty over which new policies might emerge from a Trump administration, Tom Barkin, president of the Federal Reserve Bank of Richmond, told members of the Greater Raleigh Chamber of Commerce on Tuesday.
Why it matters: North Carolina's economy has boomed since the pandemic, with the state attracting new workers at one of the fastest rates in the country and companies continuing to move to the state and create jobs.
- But while President-elect Trump has provided clues about which policies he'll pursue, it remains to be seen what actually gets implemented on issues like tariffs, immigration and deregulation, Barkin said.
What they're saying: "[E]ven when you know the direction you're going, it's hard to book a trip without knowing your final destination," Barkin said in his speech.
- "Take tariffs, for example," he added, "What tariff rates will actually be imposed? On what countries? On which products? For how long? Will there be retaliation? If so, at what levels? ... I could lay out a comparable set of questions around other policy areas in the discussion, such as immigration, regulation, government spending and taxation."
Jay Bryson, chief economist at Wells Fargo, added after Barkin's speech that tariffs would create immediate inflation and drag down GDP growth, though he noted deregulation could lead to more business investment in 2026.
Yes, but: Barkin said despite the uncertainty, his baseline outlook on the economy is positive due to strong consumer spending, slowing inflation, companies' hesitancy to cut workers and increased productivity following the pandemic.
- "With business optimism so high and labor supply unlikely to continue to grow so robustly, it feels like the current labor market equilibrium is more likely to break toward hiring than toward firing, with, of course, some differences by sector," he added. "For example, in my district, there's particular concern about the path forward for the federal workforce."
Zoom in: North Carolina, Barkin added after his speech, is also in an especially strong position due to its position as a top-five state for job creation and housing permits.
- Many states are not creating as much housing as North Carolina, which is making homes more expensive and less likely to attract newcomers, he said.
- "There are a lot of good answers to [why North Carolina's economy is doing well], some of which I do think is the ability to build housing" around the large population centers in the Triangle, Charlotte and Triad, Barkin said.
- "I think [North Carolina is] a community that is still welcoming growth," he added, "and there are many communities I go to — even in my district, like Northern Virginia and Maryland would be good examples — where the communities they're not welcoming more housing, they're not welcoming more business, they're not welcoming more traffic. This place still is welcoming."