It’s going to be a long, hard year for unemployed Georgians seeking jobs and motorists feeling pinched at the gas pump, a new economic forecast says.
The effect of high oil prices and a still-crippled construction industry have slowed the state’s economic recovery and will do so through the rest of 2011, Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University, said in a quarterly report Wednesday.
Dhawan trimmed his forecast of new job growth in the state to 33,200 for the year -- 21,600 in metro Atlanta -- and said the state jobless rate will remain about 9.8 percent.
The good news: a much stronger recovery is still in the cards for 2012 and 2013, when Dhawan sees statewide job growth of 76,600 and 85,200, respectively, and the jobless rate dropping to 8.4 percent.
For the rest of 2011, however, he expects oil prices to hover between $90 and $100 a gallon, keeping gas prices well above $3 a gallon and inevitably affecting both consumer spending and business hiring.
“There will be a slow down in the economy because of this thing,” he said of gas prices.
He cited as one example Atlanta-based Delta Air Lines, which has been prompted by higher fuel costs to raise some fares and trim its workforce. New doubts about consumer spending mean service firms “are not about to hire until they see the white-in-the-eyes of the demand creature,” Dhawan added.
Dhawan said the early stages of the rise in gas costs were offset by payroll tax cuts. But when it reached toward the $4 mark, he said, “All the money (consumers) gained went straight into the gas tank.”
During his quarterly presentation Wednesday, which touched on everything from commodity prices to hotel occupancy to Federal Reserve policies, Dhawan said housing permits in the metro’s beleaguered real estate industry will grow 18.2 percent in 2011, 26 percent in 2012 and 37.4 percent in 2013. However, that will still be below 2008 levels.
Mark Woodworth, president of Colliers PKF Hospitality Research, a speaker at the presentation, said metro Atlanta hotels are seeing improvement in room rates, but he noted few new hotels are being built because the sector is saturated.
Michael Drury, chief economist for McVean Trading & Investments, warned that the demand for ethanol and feed for livestock is driving up prices for corn and making it less affordable and plentiful for consumers at grocery stores.
“Corn has traded more like a fuel than like a food,” he said.
Steve Palm, chief executive of real estate forecasting firm Smart Numbers, agreed with Dhawan’s analysis of the housing. Easy lending, government interest in boosting home ownership and overexuberant builders led to a glut of homes that won’t be absorbed for years.
“We are never going to get back to where we were,” Palm said. “Everything went too fast and was too inflated. We will be way off our highs.”
