PNC: Employers pessimistic about NC recovery

Editorial by Fayetteville Observer, October 7, 2013.

Even as state legislative leaders have rushed to make North Carolina more "business friendly," they may also have sent up warning flares that are slowing our economic recovery.

We feared that would happen when the General Assembly launched efforts that have weakened the state's safety nets. Failure to expand Medicaid, efforts to undermine the Affordable Care Act and drastic shrinking of the state's unemployment benefits have sent negative messages to many companies that had eyed North Carolina for expansion. So did a sharp rightward shift in social policy.

Those factors are noted in a semiannual report on the state's economy, compiled by PNC Financial Services Group Inc. The bank's survey found employers increasingly pessimistic about economic recovery. This has led them to cut back in hiring and in seeking loans to finance expansion. The survey looks primarily at small and midsized businesses - the real core of this state's economy.

A PNC spokesman said "N.C. business owners frequently mentioned the major public-policy changes at the state level, and the controversy surrounding some of the new laws." An economist at the bank also suggested that this state is on a "two-track" recovery, with Charlotte and the Triangle moving strongly out of the recession but other cities and rural areas lagging.

North Carolina Secretary of Commerce Sharon Decker has also expressed concerns about the negative national publicity that has battered the state's reputation.

Decker's Commerce Department has made a priority of "rebranding" and promoting the state aggressively. Igniting recovery is especially difficult in the state's rural areas, which include about three-quarters of the counties. There, unemployment is high and has been since before the recession. The demise of textiles and the tobacco and cotton economies has battered rural North Carolina for decades.

Initiatives in tourism, new forms of agribusiness and specialty textiles have made small improvements in the rural economy, but not the kinds of gains we've seen in the major metropolitan areas.

We hope lawmakers are done with their remaking of the state's tax systems, regulations and social policies. It's time to show some stability to the business world, so employers large and small know what to expect here.

At the same time, the state also needs to redouble its efforts to strengthen our rural economy with innovative new industries. That job is underway in Raleigh and needs plenty of legislative support.

That is the path to a vibrant economy. Let's synchronize compasses and walk it.