This content first appeared in Economy & Business 2026. Click here to view the full publication.

By Ted Abernathy, Managing Partner, Economic Leadership, LLC

Last year, as 2024 ended, I wrote that I believed we were approaching a post-pandemic return to more economic normalcy and that I was cautiously optimistic about 2025. The past year, however, has been saturated with policy uncertainty and mixed economic results.

Unemployment has remained low, the stock market high, and GDP growth solid but uneven. Retail sales, driven by higher wage earners, have performed better than expected, but more recently, prices for food, energy, insurance, and health care have reignited modest inflation, with costs growing faster than wages. Consumer sentiment has dropped dramatically in recent months. Despite several Federal Reserve rate cuts, housing markets have remained disappointing for most regions, with slow starts and more sellers than buyers. Job growth slowed throughout the year, and layoffs accelerated more recently.

Looking back, much can be written about 2025, but any signs of the “normalcy” I hoped for are hard to find. Unprecedented shifts in federal trade policies, immigration, and research funding have sparked profound economic changes. The impacts will ripple through the U.S. and global economy for years. As we enter 2026, business and community leaders tell me they expect change to accelerate, and trade policy, artificial intelligence, and uncertainty to remain the watchwords.

The United States’ shift from the geoeconomic principles of the past 50 years—free trade, low tariffs, shared multilateral rules, privatization, deregulation, and open markets—to an America-first philosophy of tariffs as negotiating tools, domestic production, and power-based unilateral engagement has created a new business reality, one filled with opportunities and threats.

In addition to geoeconomic shifts, 2025 continued the emergence of AI. Over the past three years, since the first generative AI tool (ChatGPT) was released, it seems as if every business and news publication has published a daily article about the predicted impact and disruptions. AI will almost certainly lead to greater productivity and accelerated product development eventually, but in the next few years, many occupations and whole industries will experience disruptions.

North Carolina and our region will face these changes and opportunities with the advantage of being one of the most competitive states and regions in the country. Last year, our state was ranked among the top five states for doing business by most publications, including a No. 1 ranking from CNBC. North Carolina enjoys top-five rankings for doing business, corporate taxes, responsive state and local governments, availability of sites, and energy availability and costs. Population and job growth over the next decade are expected to be among the national leaders.

The Raleigh-Cary MSA ranked second among the one hundred most populous metros in Economic Leadership’s annual competitiveness rankings. Regional growth is projected to be the fastest in the state and among the leaders nationally. Currently, the region has a competitive advantage in some of the most exciting advanced industry sectors: biopharma, cleantech, chips, and traditional tech.

But 2025 revealed some vulnerabilities and challenges. Federal research cuts rippled across the region’s universities and federal labs. Technology company layoffs and shifts in national policies for foreign-born technology specialists slowed the region’s job growth. Despite many significant economic development wins for the Raleigh-Cary MSA, the percentage loss in manufacturing jobs was higher than the national average.

Years ago, when I helped market the region, I told clients that three things differentiated the Research Triangle Region: (1) outstanding higher education institutions and the region’s R&D funding, (2) the balance between outstanding quality of life (QOL) and moderate cost of living, and (3) the region’s ability to deliver trained workers through consistent in-migration and world-class community college training. Projections suggest that the region’s future remains excellent, but complacency in a time of rapid change can be dangerous.

• 1. Protecting the institutional quality and research capacity of the region’s large research universities is crucial. All our higher education institutions contribute significantly to our economy, QOL, and to our regional “vibe.” Small, private universities across the United States are facing significant financial challenges from declining birth rates, rising tuition, and increasing student debt. Any closures can have long-term negative impacts on students, the regional economy, and our quality of life. Futureproofing our region begins with protecting and nurturing our higher education assets.

• 2. The cost of living, especially the cost of housing, has long been a regional advantage. The advantage is slowly disappearing as housing prices escalate. New generations are redefining what makes a great QOL for them, demanding different housing options, more outdoor recreation, diverse cultural assets, new mobility choices, and more community engagement. Continuing to be able to deliver the quantity of talent our businesses need will depend in large part on maintaining a desirable and affordable QOL.

• 3. Ensuring our talent meets the quality expectations of businesses will fall heavily on the shoulders of our community colleges. Next-generation workforce training will need to use technology to streamline learning, accelerate skill development, and help organizations keep pace with shifting industry demands. Automation, digital tools, and fast-changing job requirements mean workers must continually learn and adapt. In many of our recent business surveys, adaptability is rated as one of the most valued skills. Ensuring that the resources are available for our community colleges to meet these needs will be a prerequisite for future success.

Finally, I believe that 2026 is the year for local leaders to further diversify the region’s advanced manufacturing. Federal reshoring efforts should provide a tailwind for new efforts. The coming year will bring challenges, but it will also bring opportunities for bold regions with leaders who protect their assets and focus on what is next. Projections suggest that the region’s economic future will be among the nation’s best, but complacency in a time of rapid change is always dangerous.

This content first appeared in Economy & Business 2026. Click here to view the full publication.