RALEIGH – North Carolina’s economy is soaring in a “V” shaped recovery from the worst of the pandemic fallout – shutdowns, social distancing. spreading infections – but whether the rapid recovery will continue is not certain. So says NC State economist Dr. Mike Walden.

“It was inevitable that with the record drop in the economy during the spring, that there would be a strong recovery, especially with the massive federal aid,” Walden tells WRAL TechWire. “This was the pattern most economists expected.”

Walden’s latest Index of North Carolina Leading Economic Indicators – based on data from November – shows forecast growth above 100 looking ahead to 2021. Back in June the index was down around 80.

And more growth could be triggered by new pandemic benefits signed into law by President Trump on Sunday night. Plus, President-elect Joe Biden also is talking about financial relief.

NCSU’s NC economic index

Right now, however, Walden sees good – and possibly bad.

The “forecast of the state economy’s direction four to six months ahead, rose a healthy 0.9% in November from its level in October,” Walden says.

But the red fever line soaring upward is not an indication that all is well with the economy, Walden cautions.

“The Index is NOT a measure of the size of the economy – it is a measure of the  forecasted pace of GROWTH,” he explains.

“Indeed, we are seeing record bounce backs in both the national and state economies since the record drop in economies in the Spring.”

But a lot of work has to be done to rebuild the economy back to pre-pandemic levels, he points out

“In terms of economic size, NC will not be back to pre-pandemic levels until late 2021, and  the state jobless rate won’t be near 4 percent until 2022.”

In his Index report, Walden points out that November “gains made in the national index and building permits, and a double-digit drop in initial jobless claims, were behind the Index’s increase.”

Yet there are caution flags.

Bboth manufacturing components – hours and earnings – recorded losses,” he writes. “This is significant, because manufacturing generally leads other sectors when the economy begins to slow. Indeed, although the improvement in the Index is good news, the re-emergence of the virus will likely trigger a retreat in the economy in the upcoming months.”

Like most people, however, he is hopeful about the impact vaccines to fight COVID-19 will help.

“[T]ut the delivery of Covid-19 vaccines to increasing numbers of residents should make the retreat short-lived,” he says.

The Index is made up of five components, including umemployment claims, building permits, average weekly hours of work and average weekly earnings.