News-Record.com

For those searching for a relatively short macroeconomic explanation of what's going on in the economy right now, this Economics Bulletin by the UNC School of Government may help.

I don't know whether this forecast is overly rosy (keep in mind it was published before the latest round of economic manure hit the fan) but it does contain an interesting breakdown of how different parts of the state might be affected:

At this point there are two strong effects pushing the U.S. economy in opposite directions, and it is difficult to determine which effect will win out. On the one hand, the collapse of mortgage financing is causing the construction industry to contract. Most U.S. recessions begin in construction in general and in home building in particular. Slow construction spending leads to layoffs, which leads to lower spending in the rest of the economy. To the extent that this pattern holds, the unprecedented collapse in housing could be expected to lead to a very long, deep recession in the near future.

On the other hand, U.S. recessions historically hit their peak when manufacturing firms are forced to lay off workers. The falling dollar will increase demand for U.S. manufacturing goods abroad and make it more difficult for foreigners to compete here. This effect would tend to create a slowdown that is short and shallow, rather than a full-blown recession.

The most current data predict that the U.S. economy will experience something in between the two scenarios described above: a long, shallow recession. That is, unemployment will not rise to the highs that it did during the 1980s, but the slowdown could go on for eighteen months or more. This would mean that the U.S. economy would not start to recover until sometime in 2009 at the earliest. As a consequence, North Carolina governments will likely continue to experience revenues that fall short of trends. If the slowdown does last eighteen months, revenue would not begin to recover until 2009–2010.

The effects of the slowdown will likely be concentrated in service-heavy local economies, such as recreation and hospitality on the coast, technology in the Triangle, and financial services in Charlotte. Traditional manufacturing towns, as well as the Piedmont Triad, should be less affected by the slowdown. Indeed, some manufacturing-heavy towns could even see an upward trend. In addition, agricultural prices will likely continue to increase as the dollar falls and foreign demand increases, and towns heavily dependent on agriculture should weather this slowdown relatively well.