Despite anemic GDP growth projected for the quarters to come, the U.S. will "technically" avoid another recession. Metro Atlanta meanwhile will feel like the economy has fallen off a cliff, a top Atlanta economist says.
GDP will contract 0.3 nationally in the third quarter of 2011, Rajeev Dhawan, director of Georgia State University's Economic Forecasting Center, predicted Wednesday in his quarterly "Forecast of the Nation" meeting. It will grow at just a 1.2 percent pace in the fourth quarter this year and rise at a mere 1.5 percent rate for all of 2012.
A normal, job-creating growth rate would be about 3 to 3.5 percent.
Stalled growth in the third quarter will not force a recession as jobs will still be created, albeit at a much slower pace, he said. And if oil continues to trade in the $80-a-barrel range, that's not good for consumers, but better than the peak prices of 2008.
Metro Atlanta, however, will feel as if it's still on the wrong track, Dhawan said. Georgia's most populous region will lose 2,300 jobs overall in 2011, he said, though it will add 32,600 in 2012.
The state, by contrast, will eke out 3,200 new jobs by the end of 2011, Dhawan said. He anticipates the state will add 46,500 jobs next year.
Overall, Dhawan didn’t set a rosy picture – locally or nationally -- though he said there were some good signs.
The biggest issues, he said, were a lack of confidence among businesses who won't hire and consumers who won’t spend until they know there is stability in the economy. Slowing growth in emerging markets such as China and Brazil, Europe’s continuing debt problems and high gas prices also are keeping the economy off kilter.
“Uncertainty is the problem,” he said. “You are still spending cautiously but you are very worried.”
Exporting, however, is expected to be a bright spot. Georgia exports have grown by double digits, with goods going to China, Turkey, Brazil and the Middle East. China, the state's No. 2 export destination, may pull back as the country tries to slow its economy to ease inflation, Dhawan said.
SmartNumbers analyst Steve Palm offered a sobering update on the area’s real estate woes, telling attendees that $22 billion was lost in metro Atlanta foreclosures in 2008. Housing starts, which numbered about 4,000 in 2008, are down now to about 500.
He said little residential construction is underway in metro areas such as north Fulton County and parts of Gwinnett and Cobb counties. But the outer exurbs, which were robust several years ago, are now the “ring of death.”
“We are in stagflation more than anytime in our history,” Palm said.
