You Decide: Can The Beat Go On?

By Mike Walden

I know I am dating myself, but when I was in high school in the 1960s, one of my favorite songs was “The Beat Goes On” by Sonny and Cher. It was a song about change, which was appropriate for the fast-changing ’60s. Almost everything was becoming different, including music, dancing, clothing, hairstyles and even food shopping, with the shift from small grocery stores to large supermarkets.

For North Carolina, there’s been a new beat going on for several decades, especially in the state’s economy. And while people in the ’60s debated whether the changes then were positive or negative, my observation is that, for the most part, North Carolina’s economic changes have been considered positive.

Indeed, North Carolina has developed one of the top economies in the country. New businesses, and especially new and expanding “cutting-edge” businesses like pharmaceuticals, technology and aerospace, have moved to the state, bringing thousands of new jobs, many of which are high-paying. All of North Carolina’s governors over the last 50 years have been successful business recruiters for the state, with both governors and legislators working together to lure new firms.

And the past year of 2025 was another success story for North Carolina, with a record $23 billion in new business investments and a record 33,000 new jobs created. It’s no surprise the state was named the “top state for business” by CNBC in 2025, the third time North Carolina has won the honor in this decade.

So, just like the Sonny and Cher song says, the economic beat in North Carolina appears to be going on. But will it go on forever? Could something happen to eventually cause the state’s economic engine to sputter?

North Carolina’s success in economic development has revolved around five factors: a lower cost of living, a favorable climate, significant open space, good public services like transportation, electricity, and water, and a willingness of households and workers to leave their states for North Carolina. The question is, could any of these positive factors be in jeopardy in the coming years? The quick answer is, yes, they could.

We’ve already seen some erosion in the state’s cost-of-living advantage. Today, North Carolina’s cost-of-living is 6% lower than the national average. But in 2019 it was 8% lower, and in 2009 it was 9% lower. To compound matters, North Carolina’s cost-of-living is no longer the lowest among the southeastern states – Tennessee is.

What happened? Strong growth happened, and growth puts upward pressure on some essential costs. Key among them is land. Growth means more building of homes, apartments, businesses and highways, all of which use land. And if the motivation to use more land increases, so do land prices, especially in prime locations.

Strong growth also means greater use of essential public services, especially roads and power. It takes significant time to build more roads and power facilities. Until the expansion of public services occurs, traffic congestion becomes greater, and power prices rise.

North Carolina’s beautiful countryside of fields and forests has also suffered losses from the development that comes with growth. For example, the Triangle region has had a 24% increase in developed land since 2000. Forecasts predict North Carolina will rank second among the states in loss of farmland in future years.

What all these “growth-causing” costs mean is that North Carolina could gradually become less attractive to new households, workers and businesses. While this doesn’t mean economic growth will stop, it does mean it eventually could be slower.

Many might respond, “Good.” Roads won’t be as crowded, land and housing prices won’t rise as fast, and more fields and forests will be preserved. Others will disagree, arguing slower growth will mean fewer economic opportunities, fewer new higher-paying jobs and a longer time to close economic gaps between individuals and counties.

Is there a way to have the benefits of growth without the costs that typically go with it? Some say there’s a way if the correct strategies are used. Common recommendations include encouraging mass transit over individual vehicles, living in multi-level residences instead of single-family homes, and developing live-work-play communities where households can find everything they need within easy walking distance. The question is how many households will freely choose these options.

If North Carolina continues on its current path, it is likely the costs of growth will at some point increase enough to dissuade many businesses and households from choosing the state as a destination. Ironically, the problems of faster rising prices, increased travel congestion, and reduced open space could naturally correct the problem by leading to less future economic growth. But, of course, this would happen after the growth-causing costs occurred.

I predict that North Carolina will remain a magnet for economic growth in the immediate future. But at some point, a growth slowdown is likely unless we find better ways to address the downsides of fast growth. So, the big question for the State – and for all of us – is how to balance the benefits of being the No. 1 state in economic development against the downsides of being the No. 1 state in economic growth. Can we do this and find successful and agreeable answers? You decide.

Mike Walden is a William Neal Reynolds Distinguished Professor Emeritus at North Carolina State University.