Friday Interview: Economic Issues Drive Many N.C. Policies | Eastern North Carolina Now

    Publisher's note: The author of this post is CJ Staff, who are print columnists for the Carolina Journal, John Hood Publisher.

JLF fiscal analyst Curry delves into state, local GDP details

    RALEIGH — Reports about the American economy often focus on growth or decline in the gross domestic product, or GDP. It's also possible to track a state's GDP. Sarah Curry, John Locke Foundation director of fiscal policy studies, discussed GDP with Donna Martinez for Carolina Journal Radio. (Click here to find a station near you or to learn about the weekly CJ Radio podcast.)

    Martinez: What is GDP?

    Curry: Well, GDP is a really complicated way of saying "the economy." And when we talk about the economy, we talk about goods and services. You have different industries, different businesses, and they create things. They make T-shirts, or they have real estate agencies, so all of those things create money. And so what GDP does is, it measures all of those goods and services over a time period, usually a year — sometimes we'll see it broken down smaller, but usually a year — and then it's usually expressed as a percent[age]. So [if] you ever hear the news [that] the United States economy grew by 3 percent last year, that's what they're talking about. They're talking about GDP.

    Martinez: We have a GDP measure of the U.S. economy and also of the state?

    Curry: Yes. So GDP is broken down. Normally we hear the United States economy, but we do break it down, so we'll have Northeast, Southeast, West — we can do it by ... state. ... For example, North Carolina, between 2011 and 2012, we grew by 2.7 percent, so a lot of news [outlets] just rounded that up to a 3 percent growth rate. For the Southeast it was around 2 percent growth, so we were ahead of the Southeast average. Now for our neighboring states: Virginia, they grew by 1 percent, South Carolina grew at the same rate we did, and Tennessee grew more, so they grew at 3.3 percent. So we're right in that average — everyone is kind of close together.

    Martinez: Fair to say then that if you are growing, if you've got a growth rate in your GDP, you are on a more prosperous trail than if your GDP contracted.

    Curry: True, yes. So when you contract — that's what happened in 2008. We stopped producing. We stopped selling. The economy shrunk or contracted. So that's when we saw our GDP go down. We had a negative percent[age]. When they say the economy shrunk by 1 percent, that's what they're talking about there, that GDP did not increase; it decreased.

    Martinez: You've done some really interesting analysis of the different sectors that are driving North Carolina's economy, and I've got to tell you, when I looked at your list, the first thing that popped out at me was the number of times that manufacturing was on your list in different areas of the state. I think, Sarah, that based on the last 10 years of history in North Carolina, a lot of people might mistakenly believe that manufacturing is on the decline in our state. Some people even say it's dead. Not true, according to what you've come up with.

    Curry: No, it's not. So when we talk about GDP, we want to look at that city data. And so a lot of our cities, like Raleigh or Charlotte, tend to take the bulk of that because they're the largest, so they have the largest economies in the state. But if we look at some smaller areas, Winston-Salem for example, their largest driver of their economy is manufacturing. Durham-Chapel Hill, that area, manufacturing also drives that area. Burlington, especially with the furniture industry there, manufacturing is driving that [economy] as well. So we need to sometimes look a little deeper into North Carolina to see exactly where it's coming from.

    Martinez: What's interesting as well, I think, is that with a lot of the free trade agreements that were passed over the last few years, again people might think that, well, that means the state's manufacturing industry is dying or going away.

    Curry: Well, it did have an impact. So if you look at Morganton, Hickory, Lenoir, that Piedmont area west of Charlotte, they definitely took a hit with CAFTA [Central American Free Trade Agreement]. But if we look at their GDP — we're 10 years after; CAFTA was in 2004 — here in 2014 we're seeing that manufacturing and trade are still that area's No. 1 driver for their economy. So even though we had CAFTA, that's still the No. 1 issue for those people.

    Martinez: What about financial? We tend to think of Charlotte as the big banking town. Is it?

    Curry: It is. Bank of America is the second-largest bank in the United States, behind JPMorgan Chase, and that is headquartered in Charlotte. So when we talk about financial activity, which is what the Charlotte region's main economic driver is, we talk about banking. So your retail banking, real estate, insurance, those types of things, financial service advisers — those types of things are what are the drivers in Charlotte, also the driver in Asheville. That was surprising to me. And Wilmington, those are two big drivers in those cities, as well, the financial activities.

    Martinez: You mentioned the coastal area. One would think that tourism and real estate would be huge industries. Are they?

    Curry: Tourism, it's not really measured, ... but what is measured in the Wilmington area is real estate rental and leasing. So we have UNC-Wilmington, we have the film industry down there, so they have a large rental industry down there. So that's actually their second-largest economic driver in the Wilmington area — rental. So you can say that that's beach rentals in the summertime, or it's rentals for [the] film industry. They don't really specify, but that's what's there.

    Martinez: What about the Triangle? We think of all sorts of things. We think of pharmaceuticals. We think of government, state government in particular, headquartered in Raleigh. The drivers there?

    Curry: In Raleigh we have, again, financial activities. We have a lot of banks that are here, doing activities. And then also professional business services, that's what categorized for the Raleigh area. And what that comes down to is, in Raleigh we have a lot of advisers, consultants, those types of things, and so those are lumped into that category, and that's the main driver for Raleigh. You talk about government. Really the big drivers in the state where government is focused are Fayetteville, Jacksonville, and New Bern. And a lot of that can be coupled with our military bases.

    Martinez: Federal government.

    Curry: Right, yes. So the government is the main driver in those areas. ... State government is not the biggest driver in Raleigh. The private sector still holds that.

    Martinez: Now speaking of state government and Raleigh being the hub of politics and policy for the state, you made some interesting analysis in the column you wrote recently about GDP and this state. Tell us why it is that you think this list gives us a mirror of sorts onto some of the things that go on in the legislature.

    Curry: North Carolina is a big state, so we have coastal legislators, mountain legislators, Piedmont. So of course your coastal legislators are going to be more concerned with issues that affect coastal regions. So we hear them talking about beach nourishment and those types of things.

    We also have to remember that the legislators from Fayetteville, one of their main concerns is the economic driver for the city. That happens to be Fort Bragg. So they're going to be concerned with that. Our Charlotte legislators, they're going to be more concerned about banking regulations, how business-friendly are we, because financial activities are the main driver of that district's economy.

    So when we look across the state and we look at our legislators, we can't necessarily say they're going to focus [only] on geographical ideas of North Carolina, but also the economic drivers for each city that that district represents.

    Martinez: Then it sort of makes sense that if you look at that list and see that some industries are prominent in different regions of the state, then you can see why sometimes those legislative coalitions are formed among legislators who are geographically spread out but they have these things in common.

    Curry: Exactly. Sometimes we'll see an issue arise in the legislature, and we have legislators and members from all over the state working on the same issue. And you think, "Well, why are they focused on this? One's in the mountains, one's at the beach, one's in the northeast corner. Why do they all care about the same thing?" Economic drivers: They want jobs in their district, they want to keep their constituents in their jobs and keep their economies growing, and so they're all focused on the same thing. And so they're going to work with the other cities in the state that have similar drivers.