Forecast: Ukraine war adds uncertainty to North Carolina’s economy

Wednesday, March 16, 2022
UNC Charlotte releases the First Quarter North Carolina Economic Forecast.

North Carolina’s economy continues to bounce back, but several factors, including Russia’s invasion of Ukraine, are creating an uncertain forecast, according to John Connaughton, director of the North Carolina Economic Forecast. 
The war in Ukraine is just one of three factors going forward that could upset the U.S. and North Carolina economies, said Connaughton, professor of financial economics at UNC Charlotte’s Belk College of Business
Other factors are: 
  • Possible new COVID-19 variants, which could temporarily slow economic activity and further compromise the supply chain.
  • The continued problem of inflation and an unclear plan from the Federal Reserve.
“Three issues creating uncertainty are too many for the economy to digest, particularly if one or more go south,” Connaughton said.  
The Belk College released the “First Quarter North Carolina Economic Forecast Report” on Wednesday, March 16, with a virtual presentation by Connaughton and Q&A.  

Gross Domestic Product Analysis

North Carolina’s real (inflation-adjusted) Gross Domestic Product (GDP) is expected to increase by 3.3% over the 2021 level in 2022, according to the report. This growth will represent the second full year of growth since COVID-19. 

For 2022, 13 of the state’s 15 economic sectors are expected to experience output increases, with the hospitality and leisure services projected to see the strongest growth at 9.2%. 
Other top growth sectors for 2022 are expected to be:
  • Business and Professional Services: 5.8%
  • Information: 5.4%
  • Construction: 4.6%
  • Other services: 4.3% 
Four sectors — educational and health services, nondurable goods manufacturing, durable goods manufacturing, and wholesale trade — are expected to experience growth rates at or below the overall state growth rate. Mining will remain steady while the state’s retail trade sector is expected to see a decline (.09%)
According to the report, 13 of the state’s 14 nonagricultural sectors are expected to experience employment increases during 2022. The sectors with the strongest expected employment increases in 2022 are:
  • Information: 6.1% 
  • Hospitality and Leisure Services: 5.3% 
  • Other Services: 5.2%
North Carolina employment is expected to reach 4,682,500 persons by December 2022, a 2.3% increase over the December 2021 employment level. The state is expected to add 103,200 net jobs in 2022.
North Carolina’s unemployment rate, which had fallen consistently in 2021, is expected to remain steady in 2022, closing out the year at 3.9%.  

2021: ‘A Cautionary Note’

North Carolina’s economy in 2021 started off strong, but the Delta variant spike in August and September slowed the economy as consumers and businesses adapted to the increase in cases and deaths, creating rising inflation problems, Connaughton said. 
“The 2021 fourth quarter experience of a new variant should provide a cautionary note for economists looking forward,” Connaughton said. “We have to realize that the COVID virus will do what it will do, which will have a periodic impact on future economic activity and the resurgence of inflation will present a drag on economic activity in 2022.”  
The North Carolina Economic Forecast, which began in 1982, is published quarterly by UNC Charlotte’s Belk College of Business. The full report and a recording of the presentation will be available on the North Carolina Economic Forecast webpage
The Second Quarter North Carolina Economic Forecast Report will be released on May 19.
About the Belk College of Business 
Established in 1970, UNC Charlotte’s Belk College of Business is one of the Carolinas’ largest business schools, with more than 5,100 students, more than 100 full-time faculty, and an alumni network of more than 34,000. Accredited by AACSB International, the college is committed to building strong partnerships in the greater Charlotte region and beyond as North Carolina's urban research business school. Learn more about how the Belk College is driving business at, and on LinkedIn, Facebook, Twitter and Instagram.