by Paige Terryberry
Senior Analyst for Fiscal Policy, John Locke Foundation
Most North Carolina voters believe the US is already in a recession
North Carolina’s unemployment rate increased for the third consecutive month in October, according to the latest release from the North Carolina Department of Commerce. The unemployment rate increased 0.2 percentage points to 3.8%. This is a faster increase than the last two months when the rate rose 0.1 percentage points each month.
The national rate also climbed 0.2 percentage points in October to 3.7% after decreasing in September.
The last three months represent the first upward trend in the unemployment rate in North Carolina since April 2020, when the unemployment rate jumped to 14.2%.
The number of people employed decreased by 10,310 over the month in the state, while the number of unemployed grew by 9,944.
The state’s seasonally adjusted labor force participation rate (the number of employed and unemployed looking for work divided against the state’s noninstitutionalized civilian population above age 16) increased steadily from December 2021 until this summer. From July to September, the rate remained unchanged at 60.6%. But in October, the rate dropped to 60.5%.
Before the pandemic, the rate was 61.3% in February 2020.
Falling labor force participation is a worrisome trend. Our economy needs workers to thrive. If the labor force participation were at pre-pandemic levels, North Carolina would have 67,805 more people in the labor force.
Moreover, inflation continues to stretch families’ budgets as it surpasses any wage gains. In North Carolina, according to the most recent data, average weekly wages increased 2.28% over the month (not seasonally adjusted) from $1,032.50 to $1,056.05. Over the past year, average private weekly wages are up 6.23% in the state. Even so, inflation overtakes these wage gains, causing real wages to fall over the past year.
At an annualized rate of 7.7%, inflation is a tax on all Americans, but low- and middle-class households are most harmed. Savings, too, are devalued. Families struggling to save for the future find their savings are worth less and less over time.
Average private work hours per week increased over the month but are still down when compared to last year. Struggling businesses are cutting back on work hours.
Increasing unemployment, paired with high inflation and decreasing labor force participation, point to an economic downturn. In North Carolina, according to the latest Civitas poll, 59% of voters think we are already in a recession.