THE CHANGING NORTH
CAROLINA ECONOMY:
Forces, Prospects, Issues
Michael L. Walden
Reynolds Distinguished Professor
North Carolina State University
1
$
N.C. Real Gross State Product ($
bil.)
350
300
250
200
150
100
50
0
04
20
01
20
98
19
95
19
92
19
89
19
86
19
83
19
80
19
77
19
2
NC Real Personal Income Per
Capita
35000
$
30000
25000
20000
15000
10000
04
20
99
19
94
19
89
19
84
19
79
19
3
NC Personal Income Per Capita as
% of US Personal Income Per
Capita
95
90
% 85
80
75
19
79
19
84
19
89
19
94
19
99
20
04
4
Change in NC Real GSP, 1977-2002
Total
Manuf.
Non-man.
0
50
100
150
200
250
%
5
Production Indices (2000=100)
Furniture
Tobacco
Textiles
Apparel
1977
2000
2002
75
686
84
78
100
100
100
100
84
110
76
97
6
Production Indices (2000=100)
1977
Electronic Equip.
Vehicle Parts
Machinery
Chemical Prods.
7
18
7
19
2000
2002
100
85
100 101
100 92
100 131
7
NC Job Changes by Industry, 19902004
Agriculture
-17%
Manufacturing
-40%
Construction
+29%
Services
+34%
8
NC Job Changes by Occupation,
1990-2000
Service
Mgmt & Professional
Transportation
Sales & Office
Factory
Farm & Forestry
+ 44%
+ 40%
+ 26%
+ 12%
- 27%
- 51%
9
FORCES BEHIND ECONOMIC
CHANGE
CYCLICAL
STRUCTURAL
10
BUSINESS CYCLE IS MORE
VOLATILE IN NORTH CAROLINA
Payroll Job Changes (%)
1990’s Recession
1990’s Expansion
2000’s Recession
2000’s Expansion
(2004)
NC
-1.9
+29
-2.4
0.7
(2.0)
US
-1.1
+22
-1.2
1.2
(1.7)
11
STRUCTURAL FORCES
* Increasing returns to education
* Reduced transportation and
communication costs
* Reduced trade barriers
* Increased spending on services
12
Earnings Ratios, Ages 25-34
High Sch./Dropout
Assoc. Deg/High Sch.
Bach. Deg/Assoc. Deg
Mast. Deg/Bach. Deg
Prof. Deg/Mast. Deg
1993
2002
1.40
1.34
1.33
1.13
1.33
1.37
1.17
1.39
1.14
1.55
13
Btu (1000s) Per Real $
Energy Use Per Dollar of GDP
20
15
10
5
0
1970 1975 1980 1985 1990 1995 2000 2003
14
Cost of Transmitting Information
Cost of transmitting 1000 words:
1970:
$0.01
Today: $0.0000001
15
Transportation Costs
Ocean freight rates fell 50% in the last
decade
Air freight rates fell 35% in the last
decade
16
Average Tariff Rates
20
%
15
10
5
0
1991
1993
1995
1997
1999
2001
2003
17
Percent of Consumer Spending on
Services
75
%
70
65
60
55
50
03
20
00
20
95
19
90
19
85
19
80
19
75
19
70
19
18
Change in Average Wage Rates,
1990-2004
80
70
% 60
50
40
W
N
t
es
W
SE
d
ia
Tr
st
Ea
r.
ha
C gle
n
ia
Tr
19
Change in Employment, 1990-2004
50
40
%
30
20
10
0
Tr
S
ia E
ng
le
Ch Ea NW W
Tr
e
ar st
st iad
20
Population and Commuting
Nine counties either lost population or
had gains under 5% between 1990
and 2000
Cross-county commuting increased
from 26% to 31% of workers
between 1990 and 2000
21
State and Local Government
Spending in North Carolina
As a Percent of Gross State Product
1992:
11.2%
2002:
11.3%
22
Change in NC Annual Nominal
Public Spending, 1992-2002
150
130
110
%
90
70
50
c
dm
A Int
t
eb
D
uc
Ed sp
an e
Tr Saf
b
Pu ron
vi
En Ser
So
23
NC Public Spending Trends, 19922002
Growing faster than GSP:
Social Services
Environment
Public Safety
Transportation
Growing slower than GSP:
Education
Debt Interest
Administration
24
NORTH CAROLINA
DEMOGRAPHIC PROJECTIONS
Total
Ages
Ages
Ages
Ages
Ages
% Change, 2004-2015
19%
0-5
15%
6-17
16%
18-24
19%
25-64
17%
65+
33%
25
Job Projections: Gainers
(by % gain)
Job
Medical assistants
Network analysts
Physician assistants
Home health assistants
Health technicians
Computer engineers
Physical therapists
Wage
Low
High
High
Low
Low
High
Medium
26
Job Projections: Losers
(by % loss)
Job
Farmers
Seamstresses
Word processors
Clerks
Secretaries
Equipment assemblers
Computer operators
Mail sorters
Wage
Low
Low
Low
Low
Low
Low
Medium
Medium
27
The Next Breakthroughs?
(from Michael Mandel)
Advanced telecom
Nanotechnology
Biotechnology
Fuel cells, solar power
Space
28
THE BIG PICTURE
World IS Getting Smaller
Implies More Competition, both for
Producers and Workers – Increased
Importance of Productivity
Benefit: Greater Variety, Lower Prices
29
Implications for Educators
Economic change is more rapid and
unpredictable
Economic change is increasingly tied
to technological change and
world conditions
30
Implications for Educators (con’t)
Information is abundant; knowing
how to use it is scarce
Prescriptions in North Carolina vary
by region
31