2014 mixed year for Georgia firms, job seekers

Metro employment 2.54 million …. up 39,793

Median home price $208,000 …. up 11.7 percent

Average weekly earnings $908.62 … up 1.2 percent

Foreclosure notices 23,260 … down 48 percent

Most recent data available.

Sources: Bureau of Labor Statistics, Georgia Department of Labor, Atlanta Board of Realtors, Equity Depot

The business of making a buck in Georgia and metro Atlanta was a mixed bag in 2014, but prospects seem to be brightening for next year.

Despite generally ho-hum profits, it was a decent year for big companies — and a good year for people who invested in them and the folks who run them.

Georgia’s 20 largest companies by revenue were headed toward an overall stock return of 15 percent for 2014, a bit better than the broader stock market.

It wasn’t a bad year for consumers and job hunters, either, at least compared to the recent past. The number of employed people rose and the number of unemployed fell. But five years after the Great Recession, job growth still has not been robust enough to make up for losses during that crisis, or to push up wages for most folks who do have jobs.

Economic growth may be perking up to a pace not seen since before the Great Recession, however.

The year started with talk of a new recession but ended with 5 percent growth nationwide in the third quarter, the fastest pace since 2003, according to revised estimates issued last week by the U.S. Bureau of Economic Analysis. With the recent plunge in crude oil prices, things look brighter for 2015.

“Suddenly people are feeling better,” said John Crawford III, chairman of Crawford Investment Counsel, an Atlanta firm that manages $4.5 billion for pensions, wealthy individuals and other clients.

Flip-flop economy

This year was flip-floppy for both national and state economies.

During the first quarter, Georgia’s economy shrank at a 1.8 percent annual rate due to heavy winter storms that shut down metro Atlanta and other parts of the state, according to Georgia State University’s Economic Forecasting Center. Much of the nation felt the same impact last winter.

But like the nation, Georgia’s economy rebounded in the second and third quarters. It’s expected to continue growing at a healthy pace through next year, according to forecasts by GSU economist Rajeev Dhawan.

Likewise, it was a solid year for Georgia’s top companies, which generally had strong stock returns in 2014 despite fairly weak revenue growth and often falling profits.

Among the 20 largest Georgia companies in terms of revenue, the typical stock return has been 15 percent this year, even though revenue growth for the group averaged 3 percent from a year ago, and reported profits fell 2 percent on average.

That’s been the pattern for a few years now, as companies and investors have grappled with a combination of generally slow economic growth, low inflation and low interest rates, said Crawford.

“We’ve got more supply than demand,” he said, forcing companies to scramble more than ever for revenue and profit growth.

Until recent quarters, annual U.S. economic growth had been creeping along at about 2 percent or a little higher, keeping a damper on customers’ spending. Most companies’ profit growth has come not from strong revenue growth, but from keeping a lid on labor and other costs, Crawford said, and that’s getting tougher with each year.

But the stock market, as measured by the Standard & Poor’s 500 index, is likely to have another double-digit return for 2014, after rising about 30 percent in 2013.

Profit growth among the nation’s largest companies — those in the Standard and Poor’s 500 index — is expected to be 9 percent this year vs. 15 percent year. But that’s been enough to sustain the fourth longest uninterrupted stock market rally since the Great Depression of the 1930s, said Adrian Cronje, chief investment officer at Atlanta-based Balentine, which manages $1.5 billion for clients.

“U.S. economic growth has really regained its poise,” said Cronje.

He expects companies like Delta Air Lines and UPS, which use a lot of fuel, to benefit partly from lower crude oil costs, but also from the boost that lower gasoline prices — effectively like a lower tax on consumers — has on the overall economy.

“Consumers have more money in their back pockets,” he said.

On the other hand, Coca-Cola and Duluth farm equipment maker AGCO Corp. were hampered by weak customer demand in the struggling European economy and a strong dollar, which made their products more costly overseas, said Cronje. Those challenges could continue next year, he said.

Investors continue to buy stocks and drive up their prices, said Crawford, partly because the Federal Reserve has continued to keep interest rates near historic lows to stimulate the economy. Those lower interest rates make bonds and similar investments less attractive.

Crawford said he expects more of the same next year, and for stocks to continue to be a good bet. The risk of higher inflation or a recession seems low, he said, and economic growth will likely perk up next year with the help of improved consumer confidence and lower crude oil and gasoline prices.

“That’s got to be good for the consumer,” he said.

Same old drag

Lower prices at the fuel pump look even better if you’re filling up on the way to a good-paying job. That’s where Georgia still came up short in 2014.

The state added more than 90,000 jobs in the past year. But the scale of job loss during the 2007-2009 recession and the anemic recovery afterward left a large pool of people without jobs – whether they are officially unemployed or not.

And because of population growth, those 90,000 jobs just didn’t go as far as they used to. For part of the year, Georgia had the worst jobless rate in the nation, and it continues to hover near the bottom, with a state-wide unemployment rate of 7.2 percent in November.

The number of Georgia jobs grew about 2.4 percent during the past 12 months — better than the national average, but well below the levels of the 1990s when job growth ran about 5 percent a year.

One result is that proportionally fewer people are working. If the same proportion of the state’s population were working now as in 2006, about a half-million more Georgians would have jobs.

As it is, 360,000 Georgians are counted as officially unemployed – including 190,000 in metro Atlanta. That is down from the peak but far higher than Georgia had ever seen before the Great Recession. The jobless rate only counts those looking for work — not those who have given up, retired prematurely or gone back to school in frustration.

Many new jobs are retail, unskilled logistics and office work.

The surplus of job seekers puts pressure on wages, since many employers don’t need to sweeten paychecks to find or keep good workers.