In the second quarter of 2025, North Carolina’s economy hit a remarkable milestone with a gross domestic product (GDP) of $883.6 billion. This is a record high, even when adjusted for inflation. However, our growth rate of 3.7% was slower than that of 17 other states. Looking back to early 2020, especially through the challenges of COVID-19, our GDP grew by 19%, outpacing the national average of 15% and the regional average of 18%. Only Tennessee saw growth similar to ours among nearby states.
Comparing today’s economy to that of 20 years ago highlights some significant changes. Back in 2005, government spending accounted for 14.9% of the state’s GDP. Today, it’s dropped to 11.4%. This decline reflects budget cuts, particularly at the state and local levels, while federal military spending has also decreased slightly.
Manufacturing’s role in our economy has shifted too. It made up 12% of our GDP in 2025, down from 18% in 2005. But don’t be misled—this doesn’t mean manufacturing is fading away. In fact, the actual output from manufacturing has grown more than it did two decades ago, thanks to automation and improved productivity. Meanwhile, areas like health care, utilities, and real estate have blossomed even more, with the “professional, scientific, and technical services” sector almost doubling its share of GDP.
Historically, shifts like this are not new. During the early 20th century, many North Carolinians moved away from farming due to advancements in agriculture. This shift allowed more people to pursue different job opportunities while still increasing food production. Now, with innovations in artificial intelligence and quantum computing on the rise, we might see another transformation in our workforce.
These changes, however, won’t come without challenges. When our ancestors left farms for the city, it took time for new communities to develop. Today, many in North Carolina will need to learn new skills or even move to find work. These economic shifts will have social and political impacts, some of which may be unexpected.
While government can’t halt these changes, it can help people adapt. By cutting unnecessary regulations that hinder business startups and providing better educational resources, we can prepare our workforce for what’s ahead. Investments in infrastructure—like transportation and utilities—can also support new industries that may emerge.
Another shift not fully captured in GDP numbers is the rise of remote work. More North Carolinians are now working from home, easing congestion on our roads and helping those who might find commuting difficult, like parents of young children or seniors.
In short, North Carolina’s economy is not just growing; it is evolving. And this evolution will continue, shaping the future of work and life in our state.
For those wanting to keep up with the latest trends, the U.S. Bureau of Economic Analysis provides valuable insights into GDP and economic shifts across states.
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