A new survey suggesting the future looks bright for the greater Raleigh area has important lessons for the whole state.
The website newgeography.org recently published a study of which metro areas have the most economic momentum as 2014 gets under way. The Praxis Strategy Group looked at factors such as GDP growth, job growth, unemployment rates, population growth and migration from other states.
The Raleigh metropolitan statistical area ranked ninth in the nation. That put it ahead of much-hyped cities such as Silicon Valley’s San Jose, Portland, Ore., Washington, D.C. and Seattle. That’s encouraging, and I’d like to suggest the outlook for the state as a whole might be even brighter than that result appears at first glance – but only if we keep some key facts in mind.
Joel Kotkin, an incisive writer on the economy and urban issues, noted at at newgeography.org that “virtually all the fastest-emerging economies coming out of the recession are either in the Southeast, Texas, the Great Plains or the Intermountain West.” The eight metro areas ranked higher than Raleigh include four Texas cities, Salt Lake City, Nashville, Tenn., Denver and Oklahoma City.
Politics and history are at the root of these regions’ success. According to Kotkin, “Most of the strongest local economies combine the positive characteristics associated with blue states — educated people, tech-oriented industries, racial diversity — with largely red, pro-business administrations.” In other words, they are like the North Carolina of today.
Moreover, North Carolina has a chance to catch up with areas that in recent years have grown faster. Places such as Texas have had governments that strongly supported business and free markets. North Carolina, however, for a century or so was governed by one party that seldom was an enthusiastic backer of free enterprise (though of course well-connected cronies did well.) By the time the Great Recession hit in 2007, North Carolina was losing steam. State government – whatever its accomplishments in the past — had burdened citizens and businesses with heavy taxes and excessive regulation. In recent years the state’s economy lagged behind our closest competitors in the Southeast, and unemployment was among the worst in the nation.
Finally, last year the General Assembly and governor got a chance to pass reforms to cut back the excesses of decades of liberal rule. Key measures included tax cuts and the first steps toward cutting governmental red tape. One promising sign: In the year following the November 2012 elections, the state’s unemployment rate plunged 2 full percentage points, the biggest drop in the nation in that time.
Yes, that’s only one statistic – but it’s a revealing one. It will take time for the reforms to take full effect. Yet if they work as expected, they will help kick the whole North Carolina economy into overdrive. They will allow the Tar Heel State to combine a solid infrastructure with a more prudent and business-friendly approach. That will enable us to keep pace with the powerhouse economies of other states.
Nothing is guaranteed, of course. The legislature will have to maintain its momentum. Political opponents have tried to raise a ruckus against the reforms, and will be doing whatever they can to derail progress.
Nor have all the handicaps North Carolina faces been surmounted. Kotkin noted, “One critical factor propelling growth has been the energy revolution.” Unfortunately, our state has lagged behind in exploring for new sources of energy. That could hurt later on, when other states profit from producing more natural gas and oil, and using that cheap energy to boost manufacturing and overall growth.
Nevertheless, North Carolina is well-positioned for accelerated growth, if we heed the lessons other booming areas display. Most important, we have to remember what drives real growth: Government that makes it easier for taxpayers, workers and businesses to thrive.