After revving up toward the end of last year, Georgia's economic engine this year will downshift as it hauls the burdens of higher oil prices, the Euro crisis and a still-slumping housing market, says Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University.
Georgia will break a four-year streak of job losses, but barely. The state will add just 14,300 positions, most in metro Atlanta, Dhawan said during the center’s quarterly conference Wednesday.
The state’s unemployment rate, which averaged 10 percent last year, will average 9.7 percent this year. That means Georgia’s jobs’ picture will continue to lag behind the nation’s, which Dhawan predicts will average 8.4 percent unemployment this year.
Both national and state economies are expanding but will slow, he said.
Company investments are modest and their confidence limited, so hiring is anemic, Dhawan said. “They are not firing people -- they are just not growing.”
However, the pace will pick up next year, he said. Georgia employers will add 40,600 jobs in 2013 and 66,700 during the year after.
That contrasts with the 1990s, when the population was smaller but the state typically added more than 100,000 jobs a year.
Georgia still has not recovered from the effects of the housing crash and the recession that followed when about one in every dozen jobs evaporate.
While housing starts are rising, a real recovery is not imminent, Dhawan said.
The drop in home values has left thousands of owners owing more on their mortgages than their houses are worth, which crimps their spending as well as their mobility. And since foreclosures still clog the market, that equation will not change quickly.
Moreover, the number of young people buying homes has fallen dramatically – perhaps because they don’t have jobs and are living with their parents, Dhawan said.
“These people are not demanding homes,” he said. “No wonder new home sales are tremendously down.”
The worst-performing sectors are linked to real estate, Dhawan said: construction and finance, as well as government, whose tax receipts plunged along with home values and hiring.
Those sectors account for one-quarter of the economy, he said. “It’s a bifurcated economy. Take those out and jobs are growing.”
Most of the jobs added will pay less than $60,000 a year, Dhawan said.
Retail will add jobs, as will leisure and hospitality and office work that includes many modestly paid white collar jobs. Technology – the highest paying sector – was crucial to the state’s 1990s boom.
The technology workforce has shrunk 30 percent and will fall further this year, Dhawan predicted.
Even the modestly upbeat forecast faces potentially dangerous obstacles.
The European crisis will undermine the export business for Georgia and the nation and roil financial markets, but not enough to toss the economy back into recession, Dhawan predicted.
The price of oil, which seeps into nearly every corner of the economy, may be the more urgent threat since every rise in the price of gasoline soaks up more of consumers’ disposable income.
Oil prices are not yet high enough to cause a recession but they are already doing damage, Dhawan said. “We have an oil shock running through the system.”
About the Author
