Job growth in Georgia will slow through 2019, but the near-term risk of recession is low barring major external shocks to the economy, according to a quarterly report from the Georgia State Economic Forecasting Center.
While job growth remains solid, the pace will decelerate – with the drag coming from “factors beyond American borders,” Rajeev Dhawan, the center’s director, said in a report released Thursday.
Nevertheless, “I am feeling way more optimistic than I was,” Dhawan told attendees at the center’s quarterly conference.
Investment picked up in the first half of the year, he said, adding, “Investment today means jobs tomorrow.”
But a stronger dollar makes Georgia products more expensive overseas, which weakens demand for exporters, he said.
So job growth in both manufacturing and corporate sectors will decline, Dhawan said.
The state this year will get a mix of friction and stimulus from Washington, D.C., he said. On one hand, a big infrastructure package seems unlikely, but on the other, Congress could move on taxes.
“Your Christmas gift will be a tax cut geared toward the so-called middle class,” Dhawan predicted.
Lower taxes boost consumer spending and “Congress will tee up a personal income tax cut by Thanksgiving,” he said.
Right after that, expect the Federal Reserve to raise interest rates – a move that will dampen sectors sensitive to borrowing rates, such as auto sales and housing starts.
Office jobs – typically paying better than average – have been rising solidly. But some large Georgia sectors have been relatively stagnant: leisure and hospitality, retail, education and government, Dhawan said.
“That is one-third of the economy that is not adding much,” Dhawan said.
Hiring in technology also has slowed, and the share of higher-wage jobs in Georgia has been falling for three years, he said, affecting personal income growth.
Housing, so crucial to the Atlanta economy for so long, is no longer the engine it was. New home starts will increase but only moderately, Dhawan said.
The current, eight-year-old economic expansion is the third-longest on record, two years shy of the expansion that started in 1991.
But there is no imminent threat of a new recession, Dhawan said.
“Can this go another eight quarters? I forecast that it can do it.”
External factors could change that. One potential danger would be a spike in oil prices if supplies from a major source — strife-torn Venezuela, for instance — were interrupted.
The state’s economy, which has added 96,200 jobs in the past 12 months, will expand by about 86,100 positions during this year and 72,800 next year, according to Dhawan.
Atlanta, which accounts for the lion’s share of hiring, will slow down in parallel, from 65,500 in 2017 to 51,800 next year, he predicted.
But the second half of this year will be a lot stronger than the first half, Dhawan predicted, as increased business investment since the presidential election begins to show up in hiring.
That investment is not as strong as it was two years ago, Dhawan noted, but it’s stronger than in 2016.
Forecast for unemployment rates
Georgia/U.S. by percentage
2017: 5.1/4.5 percent
2018: 5.2/4.6 percent
2019: 5.4/4.7 percent
Sources: Economic Forecasting Center, Bureau of Labor Statistic
Forecast for job growth
Sources: Economic Forecasting Center, Bureau of Labor Statistics
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