From global jitters to political uncertainty, economic headwinds are pushing back the Georgia economy and will slow job growth for the next two years, according to an updated forecast.
Job growth during the recovery peaked in 2014 and is now in a slide that will continue through 2018, Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University, said Wednesday.
The economy is relatively healthy in Atlanta and Georgia, but the impact of European woes, China’s economic stall-out and an erratic oil sector is inescapable, he said.
“It is a very inter-connected global economy.”
Georgia has drawn or grown companies whose business reaches across national borders. Of the nation’s largest public companies, 18 are headquartered in the state and 14 of those rely heavily on business overseas, Dhawan said.
Georgia is also a significant exporter, accounting for $38.5 billion in goods last year.
Weakening foreign markets have less appetite for those goods – and a strengthening dollar only makes U.S. goods more expensive.
There are also some domestic issues, the most crucial one being political, Dhawan said.
In the run-up to the 2012 presidential election, uncertainty about the outcome and policy direction prompted many companies to postpone investments. That seems to be happening again, he said.
“It’s the investment that’s the culprit,” Dhawan said. “And once the election is over, I am very optimistic that investment will pick up. It is what happened last time.”
Dhawan’s latest forecast includes:
— An addition of 98,000 jobs in Georgia this year, down from last year’s 126,000.
— Statewide growth slowing even more in 2017, as the economy adds 75,100 jobs.
— Another deceleration in 2018, with the addition of 69,800 jobs.
Metro Atlanta, as usual, will account for more than half the growth in employment, Dhawan said: 65,700 jobs this year, 54,600 jobs next year and 52,300 jobs in 2018.
But he emphasized that the quality of jobs is crucial to understanding the economy. High-paying executive or tech jobs, for example, fuel sales of upper-tier homes and condos or rentals of upscale apartments.
Overall income – not adjusted for inflation – will keep rising overall at a pace of about 5 percent a year. But the vast majority of the new jobs will not pay well, and that is a concern, Dhawan said.
“Do not blindly look at the number of jobs and think: ‘We need this much housing and this much office space,’ ” he said.
Retail, healthcare, hospitality each account for about 11 percent employment in Georgia. But more than 80 percent of those jobs pay less than $50,000 a year, according to the center’s calculations.
Dhawan acknowledged the limits of forecasting. Foreign crises could intensify, a trade war would endanger growth. And with interest rates so low, the Federal Reserve might find itself hamstrung in responding.
On the other hand, some things may mean a stronger-than-expected economy, he said.
“Housing may be stronger than I think it is.”
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