Pacesetting states offer growth lessons JOHN HOOD MARCH 19, 2025

North Carolina is one of the fastest-growing states in the country. If present trends continue, we’ll surpass Georgia and become the eighth-most-populous state by 2030. There’s even an outside chance we’ll overtake seventh-ranked Ohio.

This is a fact. What it means is contested. Indeed, for the past 15 years, Republicans and Democrats have argued incessantly about it.

The former argue that tax cuts, regulatory relief, and other government reforms enacted since the GOP won control of the General Assembly made North Carolina a better place to live, work, and invest, yielding impressive economic results. For their part, Democrats question whether our growth has been truly impressive and argue that it has occurred despite North Carolina’s conservative turn, not because of it.

A single column can’t settle this dispute. What I can do is supply some context. Pulling data from the US Bureau of Labor Statistics, Bureau of Economic Analysis, private think tanks, and other sources, I compared the performance of the 10 most populous states over the past five years.

From 2019 to 2024, the population of the United States grew 3.6%. Population surges in Florida (8.8%), Texas (7.9%), North Carolina (5.3%), and Georgia (5.3%) outpaced that average. Pennsylvania, New York, Ohio, Michigan, Illinois, and California lagged behind. During the same period, those four states — Florida, Texas, North Carolina and Georgia — also outperformed the rest in job creation and real GDP growth. Our state ranked a strong third on both measures.

As it happens, the top four are, from a governance perspective, red states. Florida, Texas, and Georgia had Republican trifectas (governor and both legislative chambers) during the period in question. North Carolina had a Democratic governor, but our constitution divides executive power among 10 elected officials and gives our legislature much more power than in most other states.

As a result, the four states have generally pursued conservative policies. The Tax Foundation’s latest ranking of tax competitiveness puts Florida first, Texas second, and North Carolina third among the 10 most-populous states. At the bottom are New York and California. A broader Fraser Institute measure of economic freedom that includes taxes, spending, and regulation shows the same four states high and the other six middle to low.

I know correlations don’t establish causality. But the empirical evidence for the growth-enhancing effects of tax cuts and regulatory reforms is deep and, to my mind, persuasive. Perhaps more to the point, critics of the General Assembly have become increasingly unpersuasive over time. Their dire predictions have fallen flat. North Carolina’s taxes are lower, our regulations are lighter, and state spending as a share of GDP is about a fifth smaller than it was in 2010. People keep moving here. Companies do, too.

Does that suggest government is all cost and no benefit? Nah. Every sensible analyst recognizes the economic value of public services (which doesn’t mean their only value is economic). All other things being equal, states with effective schools, safe streets, and adequate, well-maintained infrastructure will attract more households and businesses.

The mistake here is assuming an inherent tradeoff. Reality teaches a different lesson. High-tax, high-regulation states such as New York and California can’t outcompete the likes of Texas and Florida because the latter deliver better public services, too!

According to the Reason Foundation’s latest analysis of highway performance, for example, North Carolina (#1), Georgia (#6), Florida (#14), and Texas (#25) fare much better than Pennsylvania (#37), New York (#45), and California (#49). And if you take the latest National Assessment of Educational Progress scores and adjust for student background — so as to spotlight the value added by schools — Texas, Florida, and Georgia get the highest ratings, again.

Alas, on that last measure, North Carolina has taken a tumble. In 2019, our schools ranked third in adjusted test scores among the 10 most-populous states. In 2024, we were eighth, comparable to California.

If left unaddressed, that really could endanger our future growth. Guess we need to be more like Florida.

John Hood is a John Locke Foundation board member. His books Mountain Folk, Forest Folk, and Water Folk combine epic fantasy and American history.