North Carolina In The Connected Age: The Creation of the Connected Age

The following is an excerpt from Michael L. Walden’s North Carolina In The Connected Age: Challenges and Opportunities in a Globalizing Economy. At a time when North Carolina’s population is exploding and its economy is shifting profoundly, one of the state’s leading economists applies the tools of his trade to chronicle these changes and to inform North Carolinians in easy-to-understand terms what to expect in the future. 

Today we are living in a technologically connected age that has completely transformed the North Carolina economy, Walden explains. Once driven by tobacco, textiles, and furniture, the North Carolina economy now thrives on technology, pharmaceuticals, finance, food processing, and the manufacture of vehicle parts. While the state as a whole has benefited from these dramatic transformations, some population groups and regions have not experienced consistent economic growth. Walden identifies education as the key factor; a skilled, college-educated work force, he argues, is now a region’s most prized commodity.

Walden’s North Carolina In The Connected Age was featured recently on our National Technology Day reading list.

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As in all states, the economy in North Carolina is influenced by events at the national level. Indeed, because the U.S. economy is so highly integrated in national markets, much of North Carolina’s change and development are linked to national trends. For example, national economic expansions and recessions are echoed at the state level by similar booms and busts. In addition, national technological, demographic, and production changes are mirrored at the state level.

This chapter sets the national context for North Carolina’s economy by tracing the nation’s economic development since 1970. This analysis serves as the basis for evaluating North Carolina’s economic progress in chapter 2.

The Connected Age: Shrinking Space and Time

Although three and a half decades constitutes but the blink of an eye in recorded history, life changed more dramatically between 1970 and 2005 than was the case in some earlier centuries. Like never before, people, countries, and economies became interrelated and interconnected. Technology overcame distance and culture. Communicating halfway around the world became just as easy as talking to a next-door neighbor. Products and labor increasingly flowed to markets without regard to international boundaries. The world became linked digitally, globally, and competitively. The Connected Age arrived.

Since most change occurs with a degree of gradualism over time, many living through the Connected Age did not comprehend the massive changes it brought. Yet the cumulative impacts on life, work, and spending are eye-catching when some key indicators are compared for 1970 and the early 2000s.

In 1970:

• cell phones, the Internet, and personal computers did not exist
• GM, Ford, and Chrysler dominated U.S. auto sales
• only one in twelve women had a college degree, and jobs held by women paid less than half as much as jobs held by men
• fewer than half of married women worked for pay
• one of every four workers had a factory job
• the average household had 3.15 persons
• households spent almost twice as much on food eaten at home as on food at restaurants
• households spent more on food than on transportation
• the average size of a new home was fifteen hundred square feet, and the average household owned 1.7 vehicles
• 639 airline miles were flown for every person in the country
• African Americans were the largest minority

In the early 2000s:

• the majority of households have cell phones and personal computers, and one-third of households are connected to the Internet
• the Toyota Camry is the best-selling sedan
• one in four women has a college degree, and jobs held by females pay 68 percent as much as jobs held by men
• more than half of married women work for pay
• one of every ten workers has a factory job
• the average household has 2.57 persons
• households spend half again as much on food eaten at home as on food at restaurants
• households spend more on transportation than on food
• the average size of a new home is 2,330 square feet, and the average household owns 2.1 vehicles
• 2,254 airline miles are flown annually for every person in the country
• Hispanics are the largest minority

These numbers demonstrate some key trends in the Connected Age. We bought and used new technology, we spent more on travel and traveled more by air, we bought more foreign-made products, women became more educated and worked for better pay outside the home, households became smaller, factory work declined, we ate out more, we bought bigger homes and more vehicles and relied less on doing things ourselves, and our population became more diverse. The following sections provide details on how the nation’s work, life, people, technology, and government changed during the Connected Age.

Production: Shifts and Shakes

Americans produced more during the Connected Age. The national output of goods and services increased 138 percent, rising from $5.2 trillion in 1970 to $12.4 trillion in 2005 (both values in real, or inflation-adjusted, 2005 dollars). This was an annual average growth rate of 2.5 percent, only slightly lower than the post-World War II growth rate.

Of course, a share of the economic growth resulted from the fact that more people lived and worked in the country. The nation’s population jumped from 205 million to 295 million over the thirty-five-year period. Therefore, it is perhaps more revealing to examine changes in production per person. Here the news is also impressive. Goods and services production per person grew from $25,380 to $41,959 (constant dollars), a 1.5 percent average annual increase.

Although the national economy indeed expanded during the Connected Age, it did not do so in a consistent, straight-line way. A business cycle was evident, signifying an irregular but recurring pattern of growth followed by recession. Recessionary periods occurred six times in the Connected Age: December 1969–November 1970, November 1973–March 1975, January 1980–July 1980, July 1981–November 1982, July 1990–March 1991, and March 2001–November 2001. As measured by the percentage decline in production, the recessions of 1974–75 and 1981–82 were the most severe, while those of 1969–70 and 2001 were the mildest.

Even though national production increased, substantial variation occurred in the growth rates in specific economic sectors (figure 1-1). Growth was strongest in wholesale and retail trade, transportation/communications/public utilities (TCPU), agriculture, services, and finances and was weakest in manufacturing, construction, and government. As a result, the composition of the national economic pie changed. The goods-producing sector (manufacturing, construction, and agriculture) decreased from one-third of spending in the economy in the 1970s to less than one-fifth in the 2000s, while the service-producing sector (wholesale and retail trade, finances, TCPU, and services) correspondingly increased. And while a decline occurred in manufacturing’s relative economic importance, total manufacturing output still increased (the growth rate for manufacturing is positive in figure 1-1). A marked shift also took place within manufacturing, with production moving to durable goods such as industrial machinery and electrical equipment and away from nondurable products such as apparel and printing.

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Michael L. Walden is William Neal Reynolds Distinguished Professor and extension economist in the Department of Agricultural and Resource Economics at North Carolina State University. He is author of seven books, including Smart Economics: Commonsense Answers to Fifty Questions about Government, Business, and Households. He also produces a daily radio program and writes a weekly syndicated newspaper column.