Before the Civil War, the American economy had been primarily an agricultural economy. Also, the beginnings of the Industrial Revolution had been purely north of the Mason-Dixon line. The first stages of the Industrial Revolution were starting by 1800, and with the war, the Northern states were at an advantage over the mostly agrarian Confederacy. Therefore, during the war, the South had little manufacturing capacity, few railroad tracks, and fewer banks as compared to northern states. By 1860, the north had 90% of the states' manufacturing capabilities.
The South had slave labor, but fewer railroads and methods to mobilize their resources. There were also naval blockades preventing Southerners from exporting their crops. During the Civil War, the Union relied and capitalized on the northern states' booming industrialization efforts which put the South to shame. Every sector of the North's economy experienced a boost during the war, from farming, textiles, iron production, transportation to weapons manufacturing, because all of these economic sectors and manufacturing were mechanized. On the other hand, the South did not have as much of an industrial economy, and much of the war was fought in the South, which was a disadvantage to them.
Since much of the South's economy had been slave labor, the emancipation of slaves, which had been their primary source of income, threatened the very core of the South's labor economy.