Three factors could limit our growth

North Carolina’s economy continues to outpace that of most competitors. The latest employment report from the US Bureau of Labor Statistics, for example, showed a net gain of 67,900 jobs over the past 12 months. That’s an annual growth rate of 1.4%, higher than the national average (1.1%) and all but one of our neighboring states (South Carolina posted a sizzling 2.7% rate).

We’ve also witnessed a series of big economic-development announcements, including a JetZero manufacturing hub at Piedmont Triad International Airport, a major Amazon investment in Richmond County, a new Daimler Truck Financial Services headquarters in Mecklenburg, and new BuildOps and Genentech facilities in Wake.

I don’t usually play the role of Eeyore — thistles are, after all, rather hard to swallow, what with all those pointy things sticking out — but I feel compelled to point out that jobs announcements often prove overly optimistic, that uncertainty pervades broader financial and investment markets, and that the Conference Board’s index of leading economic indicators has fallen by 2.7% over the past six months, far more than the 1.4% contraction during the previous six-month period.

More importantly, while I have no doubt that North Carolina is better positioned than most states to handle whatever the next few months may bring, I see three dark storm clouds out on the horizon. Each represents a potential threat to our economic competitiveness and vitality in the long term.

One bears the label “adequate housing.” Our state and local policymakers deserve praise for measures already enacted to loosen zoning codes and other land-use regulations. It’s easier to add new homes and apartments in North Carolina than in most other states, which is why prices haven’t soared as much here as in other fast-growing areas. As a new economics paperby Harvard’s Edward Glaeser and the University of Pennsylvania’s Joseph Gyourko demonstrates, “local barriers to construction increasingly determine where America grows.”

Still, more action is required. Too many young North Carolinians are struggling to find adequate space or to afford to buy their first homes. And some cities in Texas, Florida, and other peer states threaten to erode our competitive edge. According to the American Enterprise Institute’s Housing Center, Raleigh has a fairly healthy supply of housing but Charlotte has fallen into the middling range. We need to make it easier for builders and renovators to add inventory — and not just in our urban markets.

My second concern is about infrastructure. In the west, Hurricane Helene wrecked roads, bridges, water systems, and more. But capacity and maintenance shortfalls are evident across the state. The solution isn’t just to throw more money at the problem, though more money will be required. Policymakers also need to rethink how we plan, finance, construct, and operate such facilities.

My third concern is about entrepreneurship. Convincing out-of-state businesses to relocate or add new facilities here is wonderful. But startups make economies more resilient — diversifying the employment portfolio, so to speak.

During the past dozen years, the General Assembly has enacted a bundle of fiscal and regulatory reforms that made our state increasingly attractive to businesses of all forms and sizes, including startups. Still, a recent US News report ranked North Carolina 19th for our rate of business creation. That’s better than most, to be sure. But regional competitors such as South Carolina (No. 3), Georgia (No. 8), Florida (No. 8), Alabama (No. 14), and Virginia (No. 17) fared better. Another report, which assessed states according to such factors as the share of residents who launch their own enterprises and the number of startups surviving more than a year, ranked Florida first, Georgia second, and North Carolina down the list at 16th.

Policymakers can strengthen our entrepreneurial culture by loosening occupational licensure, strengthening community-college offerings to small firms, and eliminating restrictions on home-based businesses, among other initiatives.

I remain bullish on North Carolina. Still, every so often, my inner donkey sighs and snorts. Maybe the storm won’t come, he allows, but better safe than sorry. Sound advice.

John Hood is a John Locke Foundation board member. His books Mountain Folk, Forest Folk, and Water Folk combine epic fantasy and American history.