NC, US students are in a ‘reading recession’ as test scores continue to decline

North Carolina’s reading results remain roughly half a grade level below the 2019 national average, while math has improved to about one-fifth of a grade level below that benchmark and ranks 9th-best in the country for gains since 2022. The article highlights mixed post-pandemic education recovery: persistent absenteeism, lagging reading recovery, and broader state-led reforms centered on phonics-based instruction and literacy coaching. Nationally, reading remains below pre-pandemic levels, but most states have seen math improvements and lower absenteeism.

Analysis

The key market-relevant takeaway is that education recovery is now bifurcating by subject, which should widen fiscal dispersion among district budgets and the vendors that serve them. Reading remediation is labor-intensive and politically sticky, so districts are likely to keep redirecting dollars toward coaches, diagnostics, tutoring, and attendance enforcement even if broad K-12 funding flattens; that favors service-heavy providers more than pure software. Math’s faster rebound also implies a near-term reallocation of attention and spending away from emergency reading interventions, creating a second-order risk that literacy gains stall before they compound.

The more important contrarian point is that policy adoption has outpaced implementation quality. Training teachers is a one-time event; the real alpha comes from sustained coaching, fidelity checks, and principal-level accountability, which are exactly the line items most vulnerable to budget cuts in the next 12-24 months. If states start claiming victory too early, the reading gap can re-widen even with “science of reading” laws on the books, making the current improvement narrative fragile rather than durable.

A subtle catalyst is attendance. Chronic absenteeism remains the highest-leverage variable because it directly affects both academic outcomes and school staffing needs; sustained improvement would reduce the need for remedial spend and improve district cash efficiency. Conversely, if absenteeism plateaus, districts will keep layering interventions on top of a broken usage model, which is expensive and low-ROI. The market is likely underpricing how much of the K-12 recovery story is actually a labor-management and compliance story, not just an instructional one.

Key Decisions for Investors

• Long NWE / RXT on a 6-12 month horizon: both are levered to district demand for diagnostics, coaching, and intervention tools; thesis works if states keep funding remediation even as budgets tighten. Target 15-20% upside, but cut if procurement delays extend beyond two budget cycles.
• Long BFAM (or similar attendance/compliance beneficiary) versus short broad K-12 software basket: absenteeism enforcement is the clearest near-term budget priority and should outperform pure curriculum names as districts chase measurable attendance gains.
• Buy a small basket of charter/edtech names only on pullbacks after budget season, not strength: the better entry is after the market realizes reading gains are slower than promised and districts extend spending rather than expand it. Use 3-6 month horizon, asymmetry favors buying fear.
• Avoid chasing names tied to one-time teacher-training spend; if already long, sell calls against positions. The easy money from initial Science-of-Reading rollout is likely behind us, while recurring coaching and assessment spend is more durable but lower multiple-expansion potential.
• If you want a contrarian pair, long districts/states with sustained attendance improvement vs short those where chronic absenteeism stays elevated; the gap should show up in local education-services procurement and state aid efficiency over the next 2-4 quarters.