When it comes to this year’s economy, it is all about oil, according to Rajeev Dhawan.
The dramatic drop in prices since last summer has provided “breathing room to the American economy,” Dhawan said in a report released Wednesday as part of the quarterly conference held by Georgia State Economic Forecasting Center.
Dhawan, who is director of the center, said oil prices, which have already risen in the past month, will likely rise more in coming months as demand picks up and the surge in supply ebbs, he said.
Importantly, cheap gasoline has not meant as much of a stimulus to the economy as it could have meant, he said, since consumers are treating it like a temporary tax cut.
“People are rational economic agents,” he wrote in the report. “They will splurge some on discretionary spending (eating out, for example), but otherwise will hoard and channel the savings towards a down payment on a home or other big-ticket items, like cars.”
Atlanta and Georgia should have a good year, he said.
Metro Atlanta will add 76,300 jobs this year – the lion’s share of the 97,600 positions that the economy overall will add in the state of Georgia.
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