Job growth this year and next will be too timid to cut metro Atlanta’s unemployment rate below 8 percent, according to a new forecast for the region.
The jobless rate should stay at 8 or above through 2014 before dropping to 7.2 percent the following year, said Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University.
In metro Atlanta, which accounts for more than half the state’s jobs, the rate now is 8.6 percent. That’s down from 9.3 percent a year ago but up since the spring.
Dhawan, speaking at the center’s quarterly conference, said job growth is simply too tepid to push the rate down faster. The only way it will likely fall faster, he said, is if significant numbers of jobseekers get so discouraged they stop looking for work — which can also push the rate lower, though for an unwelcome reason.
Nearly a quarter-million people in the region are searching for jobs, while the economy will add about 47,300 jobs this year and 51,800 positions the next, said Dhawan.
Even that progress is threatened by far-off events: the specter of a political confrontation that would shut down the government, the potential for delay – or controversy – in appointment of a new chairman for the Federal Reserve, the continuing climb in the price of oil.
“Those things have become greater problems just in the last few weeks,” Dhawan said in an interview with the AJC after the conference. “There is no local antidote to those things.”
With Atlanta linked to the global economy by trade, travel and tourism, shaky growth in China and the European downturn are both burdens here, he said.
For instance, Delta Air Lines has seen international business soften, Dhawan said. “That is a proxy for Asia, for China.”
The company is one of the state’s largest employers – with many decent-paying positions.
“They are the linchpin for our hospitality sector,” Dhawan said.
A slackening of overeseas orders has also undercut manufacturing in Georgia. After several strong years, the sector has started shedding workers – “catalyst” jobs that spur creation of other positions in retail stores and other local businesses.
When it comes to job creation, “manufacturing is key,” Dhawan said.
Metro Atlanta still has roughly 92,000 fewer jobs than it did before the onset of the Great Recession in late 2008. Among experts, few see vibrant growth and many see a chance of renewed recession. Since World War II, the average expansion has lasted less than five years – this one is four years old. Moreover – as with a bicycle – the slower the pace of growth in the economy, the less it would take to topple it.
“This expansion is getting old and it’s been a weak one,” said economist Dorsey Farr, a principal in the Atlanta-based investment firm of French Wolf & Farr.
“It’s amazing to me how resilient this weak recovery has been.”
Jeff Humphreys, director of the Selig Center for Economic Growth, predicted job growth of about 60,000 for metro Atlanta in the next year.
“I was saying that the risk of recession was about 40 percent, but I am lowering that to 30 percent. I think the public sector is the only headwind facing the economy now.”
State job cuts are mostly complete, but trimming is still coming from local and federal government, Humphreys said.
Emily Sanders, Norcross-based managing director of United Capital Financial Advisers, said she’s not sure which direction the economy is heading. But she fears the ride might get bumpy.
“We believe the period of post-crash stability is coming to an end. We have seen consistent upward progress but now what is more likely is a period of inconsistent ups and downs.”
Most troubling is the chance that an international crisis will flow through to consumers and companies by way of their cars, commodities and electric bills, she said.
“The highest probability threat to economic growth is clear and looming: higher oil prices. I don’t think people are ready to see $4 a gallon or higher. If we get there because of war in the Middle East it would be a shock that few people are prepared to deal with.”
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