The economic trajectory of Georgia is now pretty much the same as the national track, making the state’s growth sensitive to the same big factors – especially trade and interest rates, according to a high-profile forecaster.
Job growth will continue – albeit more slowly than in the past several years – but after nearly nine years of expansion, the economy could be tipped into a downturn by soaring rates or “an outside shock,” like a trade war or energy crisis, said Rajeev Dhawan, director of the Georgia State University’s Economic Forecasting Center.
“Expansions don’t come to an end by themselves,” he said Wednesday during the center’s quarterly conference.
Consumer confidence has been steady, but anything that badly scares consumers threatens the economy, Dhawan said. “Recessions happen when consumer confidence is already plunging.”
In years past, Georgia’s growth was stronger than the national expansion, giving the state a cushion against setbacks. But several years of deceleration have put Georgia on a glide path parallel to the relatively modest national growth, he said.
Metro Atlanta currently accounts for roughly 70 percent of Georgia’s job growth.
Metro Atlanta will likely add about 48,900 jobs this year and fewer in 2019, compared to 60,200 jobs added last year, said Dhawan.
The U.S. expansion that started in the 2009 is now the third-longest since World War II. But longer expansions are possible – Australia is currently in the 27th year of an expansion.
Among the factors affecting virtually all consumers are interest rates: American borrowing hinges on the cost of getting loans to buy homes and cars, as well as the charges for using credit cards. While the Federal Reserve doesn’t control all rates, the Fed has been raising the benchmark on which many other rates depend.
Dhawan said he expects just two more incremental hikes this year – not enough to really hurt. In fact, it could be at least a short-term plus as many “fence-sitters” stop their dithering and buy homes before mortgages become more expensive.
Georgia manufacturing has been helped somewhat by a weaker dollar. But other factors have been less positive.
For example, higher energy prices – which have killed a number of expansions in the past.
That rise is driven by concern about the Middle East, but more directly by the crash of the Venezuelan economy, which has taken millions of barrels a day out of the world’s production and pushed oil prices higher.
In 2008, a mild downturn turned into near-depression when a dramatic spike in oil prices was followed by the collapse of Lehman Bros. and the paralysis of American financial markets. Dhawan said neither stratospheric oil prices nor another financial crisis seem likely, but if they happen, Georgia will ride the same course as the rest of the country.
“Whatever happens in the national economy is what happens to us,” Dhawan said. “Global and national factors – there is no immunity to it here.”
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