Record economic expansion in Charlotte ends as coronavirus puts thousands out of work

After 113 months of nonstop growth, the economic boom that propelled Charlotte from a regional powerhouse to a global economic hub over the past decade is over, struck down by the new coronavirus.

That’s the conclusion of a new report from the Charlotte Regional Business Alliance, released Monday. The group, which is the chief advocate for businesses in the Charlotte area, estimates that the region lost 71,000 jobs in the first quarter of the year. That’s about 4.8% of total jobs in the area.

“This quarter, everything changed,” wrote Chuck McShane, the group’s senior vice president of economic research and the author of the report. The report was released at the group’s quarterly investor meeting, held virtually for the first time this year. “Growth came to an abrupt stop in mid-March as the effects of the COVID-19 began to ripple through the economy,” he said.

Hotels saw reservations plummet as conferences and travel were curtailed. Restaurant reservations disappeared as dining rooms across the state were closed under an order from Gov. Roy Cooper.

Until a plan is put together to reopen the economy, the scope and scale of the economic devastation is unknown. Every week without revenue stretches businesses further and further, and each week more of them reach their limit.

“It’s been staggering,” said Tom Barkin, president of the Federal Reserve Bank of Richmond, in a talk last Thursday. “This is going so fast, the data we’re getting is almost already obsolete.”

Economy derailed

It’s a stark turn for Charlotte, which had seen its growth outpace the national economy for most of the past decade.

Corporate relocations and expansions had become regular occurrences, greased by tax breaks and incentives easily obtained from the city, county and state. Population growth followed.

Before the pandemic hit North Carolina, it was shaping up to be another great quarter for the area’s economy.

The paper manufacturer Glatfelter announced it would move its headquarters to Charlotte. General Motors planned a new racing research and development facility in Cabarrus County. Traded-sector companies announced $323 million in investment into the region.

But now, the economic cycle has turned. Much of the economy is simply turned off. And the Alliance’s report will likely only be the start of ugly data on the state of the region’s economy.

“All the numbers we’re going to hear this quarter, either this month or next month, are going to be really bad,” said Michael Walden, an economics professor at North Carolina State University.

Uneven relief

Economic relief for businesses and workers, intended to ease the pain of the downturn, has been marred with technical glitches, incomplete coverage and limited capacity.

More than 670,000 North Carolinians have filed for unemployment benefits since March 15, and many have reported challenges just in filing their claims, much less receiving benefits.

Loan funds, designed to provide bridge financing for local businesses, ran out of money almost immediately, swarmed with demand. A $15 million emergency pandemic relief loan fund from the Golden LEAF Foundation was quickly exhausted.

The federal Paycheck Protection Program, a $349 billion stimulus package designed for small businesses, ran out of funds in weeks. Lawmakers are now debating proposals to restock the program with hundreds of billions more in relief.

North Carolina firms got $8 billion in funds, enough to cover 53% of the eligible payrolls in the state, according to data from Bloomberg News. That rate was 39th out of 50 states plus the District of Columbia.

In the meantime, conservative activists and business owners are clamoring for officials to reopen the state’s economy. Their complaints are falling on deaf ears in Raleigh, as most public health officials agree that the risk to people’s lives is too high to open up many businesses.

Bright spots

Mecklenburg County has 1,183 confirmed cases of COVID-19, the disease caused by the new coronavirus, as of Monday. And 29 people have died from the disease in the county. Over 6,000 in North Carolina have tested positive for COVID-19.

With officials still working through a testing backlog, the full extent of the virus in the state isn’t known. Economic data, too, has built-in lag, meaning that the full impact of the pandemic on the area’s businesses won’t be known for some time.

“It will be months before the true economic impacts of this shutdown of the U.S. economy will be known,” McShane wrote.

The report does predict that Charlotte will be less affected than many other areas of the country.

Generally, finance hasn’t seen a large hit from the virus, with Wells Fargo and Bank of America pledging to not lay people off during the pandemic. Logistics businesses, too, like warehouses and shipping firms, are likely to be less hurt by the downturn.

One point for optimism that McShane found was in job postings. At the end of March, full-time job postings were down 3.4% for the Charlotte region, compared to the same quarter last year. That’s far ahead of a national decline in full-time job postings of 21%.

Despite the openings, the time to fill jobs increased for both technology and manufacturing, indicating possible hiring freezes.

This story was originally published April 20, 2020 at 4:00 PM.