It has been almost a year since the nation — and North Carolina — entered what economists call the COVID recession.
The economic tailspin started in March but hit its nadir in April when statewide unemployment hit 12.2%.
Even though the employment outlook has improved, total employment in the state is still 200,000 below the pre-pandemic level; the number of households qualifying for government assistance through the SNAP program is up 20% and local food banks report serving up to five times as many families compared to the same time a year ago.
Currently 35% of the households report difficulty in meeting ordinary expenses.
Recent economic outlook reports — one from the Western Carolina University Center for Free Enterprise and several from the N.C. Justice Center — agree the recession sparked by the pandemic has dealt a crippling blow to the state, especially to rural areas.
What’s different, however, are the approaches each study takes to dealing with the problems.
The WCU study concludes the state’s recovery depends on two crucial factors — a strong state capacity for top-down relief and a healthy climate for bottom-up recovery.
“Fiscal discipline and rising economic freedom should remain at the top of policymakers’ priorities,” the report states. “The state’s economic policymakers have been doing an admirable job on these two factors for about the past decade, and these hard-fought efforts have allowed North Carolina to establish effective strongholds, not only to absorb the shock of COVID-19 but also to clear paths for ordinary people to move forward with rising prosperity and flourishing for all.”
The analysis of the Budget and Tax Center, a division of the N.C. Justice Center, stresses that providing aid directly to those who were harmed during the recession is the best way to resuscitate the economy at large.
“Federal policymakers tried a wide array of measures to jolt the economy back to life in the early days of the Great Recession,” a study stated, “and supporting people and public investments proved to be a more effective means of boosting the economy. By comparison, tax breaks for rich investors and large companies proved to be a poor investment of public dollars.”
The Mountaineer will compare the studies in the next two issues. Today we look at reports from the N.C. Budget and Tax Center.