Atlanta's economy: ‘Quasi-growth' ahead

By Dan Chapman

The Atlanta Journal-Constitution

Unemployment may rise and home sales may fall, but Atlanta's economy is poised for "quasi-growth" the next two years, the Economic Forecasting Center at Georgia State University predicted Wednesday.

Fears of a double-dip recession and deflation are unfounded "provided we don't have a steep drop in home values," said center director Rajeev Dhawan.

"What happens to home prices over the next few months will be critical to the confidence of consumers," Dhawan said. "It will affect their spending decisions, especially for big-ticket items. This, in turn, will send a signal to CEOs about whether or not to ramp up their investment and hiring plans."

Each quarter, the center mixes up a forecasting brew, throwing unemployment, spending, revenue, export, housing and other statistical ingredients into a big cauldron that Dhawan uses to divine the economic future of Atlanta, Georgia and the nation. A few hundred businessmen, non-profit and government officials and students sampled Dhawan's economic concoctions Wednesday morning at the university's student center downtown.

His was a surprisingly upbeat report. Georgia will add a measly 5,000 jobs this year, but 60,300 next year and 78,300 in 2012. The statewide unemployment rate, currently at 9.9 percent, will remain above 9 percent, Dhawan said.

Personal incomes will continue a modest rise from 4.1 percent next year to 4.8 percent the following year. State tax revenues will climb 3.5 percent in 2011 and another 5 percent in 2012.

Retail sales and industrial production will continue to "yo-yo" -- up one month, down the next -- Dhawan said, but shouldn't cause unnecessary alarm. Inflationary fears are "over-blown," he added. Exports will pull Georgia's economy along.

Indeed, the Georgia Ports Authority reported Wednesday that July was the busiest month ever with more than a quarter-million containers flowing into or out of Savannah.

Another economic bright spot: sales of personal computers in the U.S. and overseas. Paul Thomas, chief economist at Intel, told conferees that global PC sales have risen 4 percent this year. Dhawan added that software and hardware "investment today means jobs tomorrow."

Wednesday's predictions were shadowed, partly, by  morning headlines blaring July's plunge in home sales -- down 27 percent nationwide. Disappearance of federal tax credits that pumped up home sales were largely to blame.

Dhawan said no single month sets a trend.

“Taking away the tax credit takes away home sales, but only for a little while. Therefore, you shouldn’t exaggerate the importance of the monthly drop," he said. "The market is not as weak as it appears.  If you thought that an $8,000 tax credit was holding up the housing market, then we are in way too much trouble.”

The center expects the number of metro Atlanta housing permits issued next year to jump 29 percent, to 11,324 permits, and surge another 47 percent the following year.