Forecast: Job losses continue in 2010, but at slower pace

By Michael E. Kanell

The Atlanta Journal-Constitution

The painful flow of job cuts in Georgia will slow in coming months but continue through 2010, setting up a third straight year of losses, according to a new forecast.

The state's job losses next year are estimated at 60,600, down  from an estimated 214,700 lost in 2009, said Rajeev Dhawan, director of the Georgia State Economic Forecasting Center at the center’s quarterly forecasting conference.

Job growth will resume in 2011, with payrolls expanding by 67,100 positions, according to the center's latest outlook. But Dhawan said only about one-quarter will be high-paying.

Many previous recessions were followed by strong recoveries, with the sharp drop and bounce-back forming a ‘V.’ This time, Dhawan said, it will look more like the Nike “swoosh,” with a steep drop and shallow recovery.

“It may be 2012 or 2013 before we get back to where we were,” he said.

Georgia has already hemorrhaged 309,800 jobs -- 7.5 percent of all non-farm positions -- since the fall of 2007. The state's losses are proportionally worse than those in all but three other states, said Dhawan.

Metro Atlanta, which accounts for more than half the state’s labor force,will have lost nearly one in 10 jobs before growth resumes, Dhawan believes.

“We have not seen anything like this ever before and hopefully we won’t see it again,” he said. “This is much deeper than the U.S. economy.”

Roughly 500,000 Georgians are out of work and looking for a job, according to the Georgia Labor Department. With job-seekers outnumbering openings by more than six to one, the search for many goes on for months.

The federal government has passed a series of unemployment benefit extensions and another is being considered, but Georgia’s insurance fund is nearly depleted. Labor Commissioner Michael Thurmond this week indicated he'll likely seek a federal loan next month.

“I don’t think that people fully understand the level of the crisis,” Thurmond said.

Renewed growth in 2011 will come partly from healthcare, which has expanded all along. If the larger economy picks up, the region’s transportation sector – jobs in warehousing, trucking, package-handling, air transport – will also grow, Dhawansaid.

Metro Atlanta's dependence on real estate and development became painfully clear when the housing bubble burst in 2007. Sectors linked to real estate took a pounding: construction, brokers and bankers, as well as others – attorneys, accountants and the like – who depended on home sales and building.

As the recession intensified, the damage broadened, with large-scale layoffs in manufacturing, retail, leisure and hospitality. Even government has shrunk amid falling tax revenues – and that will get worse before it gets better. Dhawan predicts a 15 percent fall in tax revenues during the 2010 fiscal year.

Key to an improved economy is the elimination of “toxic” assets held by the nation’s lenders, Dhawan said: “My forecast could be wrong in six months if they could clean up the ‘zombie’ banks.”

More than a year after the near meltdown of the financial sector, business growth is still hamstrung by the unwillingness of many banks to make loans, he said.

Corporate profits and the stock market climb are not signals of an imminent hiring boom, Dhawan said. “Profits are up because of cost-cutting not higher demand,” he said.

Georgia's bright spots include the new Kia plant near Columbus, an Ikea distribution center near Savannah and a federal stimulus program for a river clean-up near Augusta.

“When I look for growth, I find it outside Atlanta,” Dhawan said.