Housing helps as economy keeps chugging into next year, forecaster says

Four years after the recession officially ended, other local economists are also generally upbeat — with some caveats. They expect job growth and a falling unemployment rate, but none thinks the region can quickly regain the jobs lost in the downturn.

Moreover, the quality of the jobs is in some doubt: More than one-third of all the employment growth in the region has been in retail and hospitality, two low-paying sectors.

While the state likely will add 77,700 jobs next year, just 14,700 of those will be “premium positions,” that is, paying at least $60,000 a year, Dhawan said. “Uncertainty is affecting big companies more than anything. ‘If I don’t have to hire, I don’t.’”

Much of that uncertainty is tied to government dysfunction, and worry about the possibility of another shutdown, as well as another tussle over whether to raise the debt ceiling. “Give me a budget deal or give me lousy growth,” Dhawan said.

And while housing is no longer surging at its frenetic pre-recession pace, the market will keep improving, adding jobs to the economy and bolstering the financial stability of many consumers, he said.

There is ample room for the housing market to grow, said Eugene James, regional director of Metrostudy, a national research company.

In 1998, before the housing boom had truly kicked into overdrive, metro Atlanta saw 27,600 housing starts. This year, there will be less than half that, James said. In the peak year of 2006, there were 58,600 housing starts.

“We have never seen inventory levels this low,” he said.

The result is a mismatch of rising demand against insufficient supply, a formula for higher prices. In metro Atlanta, the median price of a home of 2,000 square feet or more is $250,000 – compared to $215,000 a year ago, James said.

There are larger national trends that could mean more construction to come, said William Strauss, an economist with the Federal Reserve Bank of Chicago.

The recession undermined the drive of millions of young people to live on their own and start families, he said. Massive layoffs, followed by anemic hiring has meant many people still living with their parents instead of adding to demand for apartments and houses. That will improve only as the economy does.

“We are short almost a million households,” Strauss said. “What happens if we ultimately unleash that? A better labor market.”

A better labor market is long overdue – no post-recession recovery on record has been this sluggish. While job growth in Georgia has been fairly steady since early 2010, the state’s economy is still roughly 228,419 short of its pre-recession levels.

“We are still in a slower growth environment,” said Mark Vitner, senior economist at Wells Fargo. “But job growth in metro Atlanta has really picked up in the last year. I think 2014 will be better than 2013 and I think that 2015 will be better than 2014.”

Metro Atlanta and the state of Georgia were hit much harder than nearly anywhere else in the country. However, the region seems now to be outperforming the nation in job growth and should continue to recover faster than the nation as a whole, said Jeff Humphreys, director of the Selig Center for Economic Growth at the University of Georgia.

“I think we are picking up momentum,” he said. “It is not full speed, but it is better than half-speed.”