RALEIGH – From semiconductor firms such as Cree in Durham and Qorvo in Greensboro to the state’s large manufacturing economy and the big agriculture sector, the continuing trade war with China and resulting economic turmoil poses a threat to North Carolina’s economy in the form of the “R” word.
Recession.
NC State economist Dr. Mike Walden says he still isn’t a big believer that a recession is looming – “the economic fundamentals are still strong.”
But that could change if the China-US battle over trade and currency continues to drag on business and markets. And a recession would hit this state hard, Walden points out.
Recession more likely if trade, currency wars continue, warns NCSU economist
“Typically North Carolina is hit harder by recessions because manufacturing is twice as important to NC as it is nationally,” he tells WRAL TechWire.
“And because people and businesses can often postpone buying manufactured products, states that are more dependent on manufacturing are more vulnerable to recessions.”
North Carolina’s agriculture sector also is at risk with China threatening to stop imports of such goods from the US.
“Yes, US farmers have been very much hurt by our trade tensions with China. The worry is it could get worse,” Walden points out. “The other day China said they may stop all imports of US farm commodities.”
According to Farmprogress.com, the state exports hundreds of millions of dollars worth of crops and other goods a year:
“North Carolina is the nation’s top tobacco exporter, and ranks third in poultry products and fifth in cotton and peanuts sold to other countries. The state’s leading export commodities were tobacco ($573.6 million), animals and meat ($553.5 million), cotton and linters ($275.5 million) and peanuts ($23.5 million).”
The Office of US Trade Representative reports that North Carolina exports to China were $2.3 billion in 2018, ranking only behind Canada ($6.6 billion) and Mexico ($3.8 billion).
More than 10,000 companies are involved in exports, according to 2016 data (latest available) from the Trade office.
The fears of an economic slowdown also could be filtering down to tech startups in the Triangle. The newest NCSU survey of Triangle entrepreneurs show growing concerns for sales but plans to hire and invest remain strong.
Walden sees little impact on the startup sector, though.
“Economic tensions will always weigh on business decision-making,” he says. “But because the Triangle is such a vibrant and exciting market, I would expect startups and new ventures to continue.”
