2026 State of the State on North Carolina’s Economy

Speaker: Alexandra Forter Sirota, Executive Director, NC Budget & Tax Center

Transcript

Note: Due to technical issues, the first four paragraphs of this transcript are not in the recording. 

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Good morning, and thank you all for joining us.

Today’s briefing is part of our mission at the NC Budget & Tax Center to make sure every person has the supports to reach their full potential and achieve well being.

As part of our Economy for All initiative, we annually track key trends and priorities facing North Carolina families.  Today’s briefing will kick off our work ahead this year, serving as our 2026 State of the State on North Carolina’s economy.

At the NC Budget & Tax Center, our analysis focuses on how economic conditions show up in people’s daily lives. We measure it by whether people can afford the basics, whether workers earn a living wage, and whether communities have the public investments they need to thrive — not by how much the wealthiest households and corporations save in tax breaks.

As we enter 2026, that measure tells us something important: For many North Carolinians, the economy is not working the way it should — and that is the result of policy choices, not inevitability.

Where North Carolina’s Economy Stands in 2026

Let me highlight a few key realities shaping North Carolina’s economy right now.

First, North Carolina continues to be a testing ground for trickle-down economic theories.

Over the past decade, state leaders have repeatedly prioritized tax cuts for the wealthiest households and most profitable corporations. Those decisions have significantly reduced state revenue and constrained our ability to invest in the public goods that make life more affordable — including public education, child care, housing, health care, and infrastructure.

While tax cuts are often framed as helping families, cutting revenue actually limits the state’s ability to lower costs in meaningful ways. It’s public investment — in these sectors of our state’s economy — that makes everyday life more affordable.

Time and again, whether at the national or state level, the theories that have guided deep income tax cuts for the very wealthy have failed to deliver promised jobs, wage growth, productivity growth and slowed revenue growth year over year.

Second, progress in reducing hardship has stalled.

During the pandemic, strong policy interventions led to historic reductions in child poverty and improved economic security for families. But as those supports expired — without durable state-level investments to replace them — many of those gains were lost. That is not a failure of families. It is a failure of follow-through by our state’s legislative leaders.

North Carolina’s share of the population living on poverty incomes is 12.4 percent.

In many ways, North Carolina’s economy is K-shaped —  that graphic we’ve all seen — looking strong for those at the top, while workers and families across much of the state continue to struggle with low wages and rising costs.

Third, the labor market is not delivering quality jobs for everyone.

While topline employment numbers can look strong, they mask deep challenges.

Job growth remains concentrated in metro areas, leaving rural and small-town communities behind.

Wages remain too low in many sectors, and North Carolina’s minimum wage has been stuck at $7.25 for more than 16 years.

Fourth, affordability pressures are intensifying.

Housing, child care, and health care costs continue to rise faster than wages for many workers. Families are working harder, but too many are falling further behind — with disparities widening along racial, geographic, and income lines.

And finally, none of this is inevitable.

North Carolina has the resources to do better. What we lack is not money — it’s political will.

Policy Choices, Real Consequences

These outcomes are not accidental. They reflect years of policy decisions that prioritized tax cuts at the top over investments that make everyday life more affordable for everyone else.

These tax cuts will continue unless elected leaders to the NC General Assembly take action on a state budget that pauses scheduled income tax cuts for the wealthy and profitable corporations.

There is even more reason to do this now.  Federal tax cuts were extended at the end of last year — paid for by deep cuts to health insurance and food assistance — which together with state income tax cuts are giving the richest 1 percent of North Carolinians a whopping $4.9 billion in annual tax cuts.  That’s roughly the state’s entire commitment to the UNC system.

So while some are getting a windfall, most North Carolinians are getting very little directly from tax cuts.  In 2024 when we polled North Carolinians about the tax cuts, 80 percent said they had not personally experienced any benefit from tax cuts.

Meanwhile, things that could make life easier — short lines to renew a license, accessible childcare, public transportation to get to work, and affordable housing and energy are increasingly out of reach because the state has not prioritized funding these services.

The result is an economy that feels increasingly fragile for the people who actually power it.

An economy for all doesn’t happen by accident. It’s built through deliberate choices.

What an Economy for All Requires

Building an economy that truly works for everyone means choosing to invest in people and communities. That includes:

• Fully funding public education by stabilizing and increasing state investment in schools and higher education so zip code and family income don’t determine opportunity.
• Raising labor standards by increasing the minimum wage and strengthening worker protections so work provides real economic security.
• Stabilizing child care and care work by investing in providers and affordability, recognizing care as essential economic infrastructure that allows parents to work and businesses to function.
• Ensuring fair and sustainable tax policy by stopping costly tax cuts for the wealthy and profitable corporations and using those revenues to fund the services families rely on.

Right now, we’re moving in the opposite direction — continuing to cut taxes at the top while asking North Carolina’s families, workers, and communities to absorb the costs.

Why This Matters in 2026

The stakes this year are high.

Budget and tax decisions made in 2026 will shape affordability, opportunity, and economic stability for years to come — especially as federal supports remain uncertain and economic risks grow.

This is a moment for policymakers to decide whether North Carolina’s economy will continue to work best for those already doing well — or whether we will invest in the people whose labor actually makes growth possible.

Closing

At the North Carolina Budget & Tax Center, our role is to bring clarity to these choices — to connect economic data to lived experience, and to show that a different path is possible.

North Carolina’s economy works because of its people. Loving North Carolina means funding North Carolina — investing in workers, families, and communities so everyone has a real chance to thrive.