Economists watching job growth, AI frenzy in North Carolina in 2026
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The American economy this year will be driven less by the uncertainty that pervaded in 2025, and more by the AI ecosystem's frenzied growth and the wealthy consumers making money off it.
- That's according to Tom Barkin, the president of the Federal Reserve Bank of Richmond, which monitors banks and economic conditions in the district that includes Raleigh and Charlotte. Barkin delivered his annual economic outlook to business leaders in Raleigh on Tuesday.
Why it matters: North Carolina's economy has grown rapidly this decade, and 2025 was a record year for jobs announcements. But the state isn't immune to the pressures of an increasingly AI-dependent economy.
What they're saying Businesses last year were dogged by uncertainty that Barkin likens to driving through fog.
- "It was hard to put your foot on the gas when you didn't know what was around the next curve. It was hard to slam on the brakes lest it cause an accident," he says, which was why most "spent the year on the side of the road with their hazards on."
Now, Barkin says, there's a clearer understanding around tariffs and more confidence that consumer demand is real.
- With retail spending strong, unemployment staying historically low and the GDP growing "at a healthy 4.3%," optimism is in the air, Barkin continues.
Yes, but: The problem with the GDP growth is its concentration in select industries, says Tim Quinlan, a senior economist working in corporate and investment banking at Wells Fargo.
- "When you kind of look at the industries that aren't part of that big build-out of AI and tech, it's a little bit demoralizing."
North Carolina has seen a surge in new data center projects related to artificial intelligence, including a massive $10 billion commitment from Amazon.
- The state added 87,900 new jobs in the year that ended in October, with professional and business services and construction posting some of the biggest gains, according to state data.
State of play: Globally, trillion-dollar investments in AI have lifted the stock market and put more money in the pockets of wealthy consumers, as Axios previously reported.
- But more economists are growing concerned that the AI bubble could soon pop.
And that fuels concerns of a stock sell-off — stocks which are largely owned by the high-income households that account for most consumer spending, according to Quinlan.
- The U.S. economy is 70% fueled by consumer spending, so any shifts that push people to save more would be significant, Barkin says, noting that consumer sentiment is worse now than it was during the 2008 global financial crisis, according to a University of Michigan survey.
What they're watching: Unemployment and layoffs will be important to monitor this year, according to Barkin and Quinlan.
- "If you do lose your job, it's becoming more difficult to find work," Quinlan says, adding that unemployment now lasts 27 weeks on average, which has only ever happened a handful of times since the 1960s.
Zoom in: North Carolina's unemployment rate was 3.8% in November, well below the national rate of 4.6%, the N.C. Commerce Department reports.
- "Part of that is because we've got this wonderful population growth that drives economic activity across the state," Quinlan says, noting that the state's GDP growth has outpaced the rest of the country's since the pandemic.
What's next: Barkin told Axios after his speech that business leaders haven't been cutting jobs, but have been letting positions go unfilled, enacting hiring freezes and generally taking things slower.
- Layoffs suddenly shooting up — somewhat of a leading indicator because they can be monitored in real-time — will tell us whether the "low-hiring, low-firing" world is changing, which would ripple across the economy, he says.