MEDIA RELEASE: North Carolina’s recovery experiencing early summer stall

Unemployment rate stays steady at 9.4 as labor force shrinks for third month in a row

RALEIGH (July 20, 2012) –The state’s jobless rate stayed steady at 9.4 percent, according to new data released by the NC Division of Employment Security. In a troubling sign of a stalling recovery, this represents the third month in a row and the longest stretch since September of last year that the state’s unemployment rate has not improved.

Additionally, the labor force continued to shrink, down 27,300 since January 2012, suggesting that much of the steady-state in the unemployment rate is simply due to workers dropping out of the workforce and not being counted in the jobless rate. As a result, the shrinking labor force may well mask an even higher real unemployment rate.

Although national trends and the continuing financial crisis in the Eurozone leave the state’s labor market vulnerable in the coming months, a look back over the long-term behavior of North Carolina’s labor market during the current economic recovery provides a glimmer of hope that the state is simply experiencing a period of late-spring/early summer stagnation in the labor market similar to previous slowdowns over the last couple of years.

“Between national trends and the increasingly likely prospect of recession in Europe, the outlook for North Carolina’s economy is certainly ominous,” said Allan Freyer, Public Policy Analyst with the NC Budget & tax Center. “But if there is any glimmer of hope in this month’s report, it’s that this kind of stagnation in the state’s labor market has occurred before—in the summer of 2010 and the late-spring of 2011. Given this historical trend, there’s at least the possibility that these numbers reflect a temporary flat-line prior to renewed improvement. Certainly the year-over-year improvements in employment since this time last year suggest a positive trend in the labor market over the long term.”

Looking back two years, we can see several similar periods of stagnation followed by job growth, followed by stagnation. In 2010, the state’s percentage of the population with employment—often a more useful measure than the unemployment rate since it includes those who have dropped out of the labor force—dropped from 56.4% in May to 56.1% in July, before climbing to 56.4% again by the end of the year. Similarly, the labor force fell from a high of 463,000 in April to a low of 460,000 in August, before climbing again to 463,000 in December. In 2011, the employed percentage of the population fell from 56.4% in January to its lowest point of 56%, before climbing again to 56.7% in January of this year. The labor force followed the same pattern.

FOR MORE INFORMATION CONTACT: Allan Freyer, Public Policy Analyst, Budget & Tax Center,, 919.856.2151.