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That’s the growth in Gross Domestic Product forecast for North Carolina in 2025, according to UNC Charlotte financial economist John Connaughton in his North Carolina Economic Forecast 2025 Second Quarter Report. This would mark the fifth full year of growth since COVID-19.
“For four years, we have focused on the Federal Reserve actions and inflation,” Connaughton says. “In just 120 days, tariffs and trade have joined these as key factors to watch.”
In a period of heightened attention around fiscal policy, trade decisions and other factors, Connaughton puts the chance of a return of inflation in 2025 at 60-to-40. He sees a 30% chance of recession, a 60% lesser chance of recession and a 10% chance of an economic boom.
Connaughton pointed out that the U.S. unemployment rate has gone from 3.3% in May 2023 to 4.2% in March and April 2025. The Fed began reducing interest rates in September 2024. By December 2024 the Fed Funds rate dropped by 100 basis points.
Connaughton says the Fed could reduce interest rates by another 50 basis points this year. He warned that if Congress does not begin to control spending, inflation could return, which could disrupt the Fed’s plans.
“The wild card in all of this is tariffs, which could slow the economy further and cause a mild bump in inflation in the short run,” he said.
The North Carolina Economic Forecast Report, released quarterly at a community event, takes a deep look at North Carolina’s economy by sector and region. The report includes data and analysis of current trends, the Gross State Product (GSP), employment growth and unemployment. Click here for original post
Author: staff report
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