1. The North Carolina per capita income puzzle.

North Carolina’s economic growth and development through the last 60 years presents a challenging puzzle for policy-makers and all current residents. In 1959, the decennial US Census discovered that 40.6 percent of North Carolinians lived below the poverty line — twice the US average. We don’t have systematic statistics of personal income for that period, but by all accounts incomes in North Carolina were below those in the rest of the US across the board. (For a revealing and detailed look at the North Carolina economy in 1960, read To Right These Wrongs by Robert Korstad and James Leloudis.)

Here is the economic puzzle I want to pose, illustrated in a diagram.

The Bureau of Economic Analysis reports real gross domestic product (GDP) by state from 1977 to 2019: that is a measure of the value of the state’s production corrected for the effects of inflation over time. I divide that amount by the population of the state during that year to have an indicator of per capita value. I also report the corresponding value of per capita real GDP for the US as a whole. In Figure 1 we see the evolution of the two measures. The horizontal axis indicates the year of observation, from 1977 through 2019. (This graph ends before the COVID crisis.) The vertical axis indicates the GDP per capita in 2012 dollars — in other words, the observations have been corrected for the difference in prices between every other year and the prices observed in 2012 — into North Carolina starts out well below the US average in 1977, but through the years grew more rapidly. In the period 1994–2000 the US average and North Carolina’s real GDP per capita coincide. From 2000 to 2019, though, North Carolina fell off the pace again. In fact, North Carolina was 10 percent below the US average in 1977, but ended 15 percent below the national average in 2019.

There’s the puzzle — why? How did the state close the gap so quickly — and how did it fall below again so quickly?

I will post new information on this puzzle in coming days and look forward to hearing your take on this as well.