5 Things to Know About North Carolina’s Economy as 2026 begins

North Carolinians power our economy through their work every day, in every corner of the state — from growing and harvesting our food, to caring for and educating our children, to researching and developing new medicines and technologies that improve our lives. Their labor powers our economy.  

Yet, for many families, rising costs are making the basics of everyday life increasingly unaffordable, creating stronger headwinds to getting by and getting ahead. 

While policymakers have too often focused on growth, competitiveness, and headline economic indicators, we know that to truly deliver an economy for all requires considering how the people who fuel it are doing. 

When we look at the economy in this way as we begin 2026, there are real risks and genuine opportunities to boost incomes and make life more affordable.  

Here are five key realities shaping NC’s economic outlook as the new year begins:

1. Everyday life is increasingly unaffordable for North Carolinians

Costs for essentials like housing, child care, and food have risen faster than wages for too many workers in the past few years. Based on the most recent wage data, from June 2024 to June 2025, average wages for NC workers grew 3.4 percent. During that same period, costs for some essentials grew faster: housing at 3.8 percent and household energy at 6 percent in particular. 

Affordability pressures are shaping everything from workforce participation to family stability and remain one of the biggest constraints on economic well-being statewide. 

These trends are not inevitable — policy choices play a major role in determining whether families can afford to live, work, and raise children in our communities. 

Federal policy changes in the past year have actively raised costs for North Carolinians. For example, the cancellation of enhanced premium tax credits (EPTCs) that help nearly a million North Carolinians afford health care when their employers don’t provide it, is driving up health care costs for many families, squeezing already-tight household budgets. 

At the state level, inaction on a state budget means that a major cost facing families — child care — went unaddressed. The result: more child care centers are closing across the state, compounding the affordability of care for families with young children. Infant care in NC costs nearly $5,000 more than tuition at a four-year university.  

2. Wage growth has been uneven, breaking the promise that work will deliver well-being

Even as some economic indicators remain strong, paychecks for most workers fall short of what’s needed to meet basic needs in their communities.  Average weekly wages in NC remain below what it takes to meet the basics in a household budget for a single parent raising one child. 

Since 2000, the wages paid to the richest 10 percent of workers in NC have grown twice as fast as the median worker’s wages. When wages don’t keep pace with the cost of living, families are forced to make tradeoffs — cutting back on essentials, delaying health care, or leaving the workforce altogether. 

The NC General Assembly has failed to direct their attention to eroding wages, only reluctantly taking action on boosting wages for state and local workers, even as some lawmakers consistently introduce legislation to raise the minimum wage and index it to inflation.   

The result is that as 2026 begins, NC workers won’t be among the 8.3 million nationwide benefiting from their states’ actions to raise the minimum wage, which will remain at $7.25 per hour (the federal allowable minimum) in NC.

3. Policy uncertainty is limiting decision-making and economic progress

Businesses and families alike are navigating growing uncertainty driven by shifting federal policies and state-level inaction — conditions that discourage long-term planning and investment. 

Erratic tariffs and rapidly changing federal policies have caused some businesses to delay or cancel investments, including major projects in the energy sector. At the same time, families will experience increased costs from tariffs — an additional $627 per consumer in NC, according to estimates from the Economic Policy Institute — due to higher costs for imported goods as well as domestic goods that compete with imports.  

Ongoing uncertainty around state and federal budgets makes it harder for families to plan for the future as well. As disruptions to food assistance due to the federal shutdown made clear this fall, families make near-term decisions that can create longer term costs. Communities also are diverting resources from systemic efforts so they can meet near-term crises. 

As implementation of H.R. 1 moves forward in 2026 and federal action continues to cut services, families face uncertainty around access to supports in their daily lives and connections to their communities and the economy. State leaders can bring greater assurance by planning for these impacts and making clear NC is committed to every family’s well-being. State legislators and North Carolinians must call for our Congressional delegation to pursue restraint and reconsideration.  

 4. Overall income gains are increasingly concentrated at the top

Economic growth in NC has disproportionately benefited those at the top — a trend reinforced by repeated tax cuts for the wealthy and big corporations. 

Data show incomes of the wealthiest North Carolinians pulling further away from everyone else, even as many families struggle with rising costs and stagnant wages. From 2023 to 2024, North Carolina was the only state to experience a statistically significant increase in income inequality.

The state tax cuts compounded by federal ones on Jan. 1 continue to funnel gains upward, while the state remains without a full budget and critical needs go unmet.

5. Communities are less resilient — and less prepared for the next shock

North Carolina’s ability to respond to economic downturns, natural disasters, or mass layoffs has been weakened just as the need for collective responses is growing. 

In Western NC, limited flood insurance coverage has slowed home rebuilding. Small businesses impacted by past disasters have spent nearly a year urging the state for recovery grants to help maintain operations and employment, with little assistance delivered. 

At the federal level, disaster preparedness and response capacity is being reduced through layoffs, grant cancellations, shifting more recovery costs to states, and proposals to make it more difficult to qualify for federal disaster assistance even as climate-driven disasters become more frequent and severe. While a judge found in December 2025 that the cancellation of FEMA’s Building Resilient Infrastructure and Communities (BRIC) hazard preparedness and mitigation grants was illegal, uncertainty around federal funding leaves communities more exposed heading into 2026.  

In addition, the public response and infrastructure ready for economic downturns is being dismantled. When people lose their jobs, food assistance provides them with the support to keep food on the table and dollars that are immediately spent locally in the economy, providing a stabilizing benefit to the broader community.  Federal cuts to SNAP jeopardize that support.  

Looking ahead

As legislative leaders return to Raleigh, their first action should be to pass a budget that addresses the affordability challenges facing North Carolinians in child care, housing, health care and food access by stopping future tax cuts scheduled for the very wealthy and profitable corporations.

When people have what they need to meet the basics, it keeps our economy moving forward instead of stalling out.