North Carolina state economists have forecasted higher than expected revenue for the current fiscal year, with a 1.5% increase in total general fund revenues compared to the previous year. However, they predict that revenues will drop next year, potentially forcing state spending cuts. The state collected almost $300 million more than expected in individual income taxes, largely due to robust business profits, stable wage growth and growth in equity values. The forecast also includes lower growth in sales tax collections driven by higher-than-expected refunds and inflation on taxable goods. The economists predict that lower interest rates and new tax cuts will boost consumer spending and business investment through late 2026, despite sluggish job growth. They also warned that prolonged conflict in the Middle East could lead to persistently high prices and potential shortages of energy commodities.