Is the North Carolina economy growing slowly — and if so, why? NC State University economist Mike Walden answers.
“Well, the numbers do show the economy is moving ahead, but it’s moving ahead slowly. If you look at the growth rate in the economy over the last 50 years and then you look at the growth rate the last 10 years, our recent growth rate has been about half that of the last 50 years.
“In terms of why this is happening, economists really divide the potential reasons into two parts: one called demand-siders; the other called supply-siders.
“On the demand-siders, they say that increasing income inequality is moving income from lower-income folks to higher-income folks. Now the problem there is that lower-income folks spend most of their income; higher-income folks invest a lot of that income. So the argument is we are not seeing the sort of consumption and buying in stores and so forth because of rising income inequality. That’s one of the major focuses of the demand-siders.
“On the supply side, those folks tend to look at taxes and regulations. They say taxes are too high; they say regulations are too high — and that is holding back spending by both consumers and businesses. They also point to the deteriorating infrastructure.
“Now the solutions are going to come from, again, both of those perspectives: The demand-siders want to redistribute income from the rich to the poor. They want a higher minimum wage. The supply-siders want lower taxes and lower regulations. One area, though, where it appears they tend to agree is the need for more spending on infrastructure.”