RALEIGH – By some measures, the economy is steadily improving, but the emergence of a new variant of the virus that causes COVID-19 may pose a significant risk to North Carolina’s economy.

According to an index from North Carolina State University that tracks economic indicators to forecast the direction of the state’s economy between four and six months ahead, not much changed from September to October 2021.

The index tracked a decline of 0.2% between September and October.

“The Index is suggesting that the labor market in the state will continue to improve, with new jobs added and reductions in the jobless rate,” said Dr. Michael Walden, the William Neal Reynolds Distinguished Professor Emeritus at North Carolina State University, in an interview with WRAL TechWire.

But the emergence of a new variant of the coronavirus that causes COVID-19 adds uncertainty to the future economic conditions in the state and across the United States and the globe, said Walden.

Walden told WRAL TechWire in early September that the “Delta” variant introduced uncertainty into future economic forecasts, as well.

“The virus still has a great deal to ‘say’ about the economy,” said Walden.

North Carolina’s economic index falls – ‘Delta’ clouds future projections

One example, according to Walden: when the news of the emergence of the new variant, now named “omicron” by the World Health Organization, began to be distributed globally last week, after public health and medical experts expressed some uncertainty about the new variant, the stock market plunged.

“So until we have good answers to these questions, the stock market – and by extension, the economy – will be wobbly,” said Walden, noting that the index does not forecast the coronavirus.

“The most important economic news in the next week will actually be medical news about the omicron variant,” said Walden.  “If the news is that the variant is not a “big deal” for the US, then we can be more assured the economy will keep improving.”

However, said Walden, if experts state that the omicron variant “could come to the US and be highly transmissible and deadly, then economic optimism will evaporate.”  As of Monday, Nov. 29, the United States Centers for Disease Control and Prevention (CDC) website noted that no cases of COVID-19 due to the Omicron variant had been identified in the county.

The index is down 2.1% year-over-year.

Mike Walden: Could a virus take down the economy? You decide