The job market may be struggling, housing prices still sliding, the purchasing power of paychecks shrinking and one of every six Georgians receiving food stamps.
But there is one sign that the economy is growing, and there lies hope that those other measures also will improve.
Reason to believe rests on this: Rising revenues collected by the state from sales and income taxes show Georgians making more and spending more.
“Increased collections are telling us that the economic recovery has finally come to Georgia, and it is gathering momentum,” said Jeffrey M. Humphreys, director of the Selig Center at the University of Georgia. “We’ve now got a pretty long string of year-over-year increases and that suggests that the recovery is alive and well.”
Revenues collected by the state in February — on everything from sales taxes to tobacco and alcohol taxes to motor vehicle registration fees — were up 26 percent from the same month a year ago, according to the Department of Revenue.
“Those revenues tend to move in tandem with the overall economy,” Humphreys said.
Still, the more common markers remain dismal: For example, the jobless rate in metro Atlanta rose to 10.4 percent in January, the government reported Thursday.
It’s true that the rate is a “lagging indicator” — rising sometimes when improved hiring draws more people back to the job search. And the economy has tentatively started adding jobs in recent months.
But there is also a painfully deep hole to climb from: The region has 229,888 fewer jobs than when the recession started in late 2007. Nearly a half-million Georgians are out of work and actively job-searching. More than 1.7 million state residents receive food stamps, almost double the pre-recession number.
The revenue numbers are out in front of some other indicators, especially the jobs data, said Mark Vitner, senior economist at Wells Fargo. “Revenue is picking up some things that are due to activity that is not showing up in the economic numbers.”
Companies often are slow to hire — adding hours to current employees or taking on temp workers — until they are sure that customer demand has picked up. But higher tax revenues themselves can aid the broader economy — or at least limit the damage being done to it.
Thanks to dropping tax revenues, state and local governments have become drags on the economy — slowing an already stumbling recovery to a crawl. The federal stimulus of 2009 softened the blow, pouring billions of dollars into Georgia. But that spending is virtually gone.
Forty-four states are projected to have budget shortfalls in the coming fiscal year, totaling $112 billion, according to the Center on Budget and Policy Priorities. Georgia’s shortfall is estimated at $1.3 billion — 7.9 percent of the current budget.
The more programs and jobs governments slash, the more they threaten to yank the economy back into recession.
Higher revenues would mean a smaller shortfall and fewer cuts.
It is more than one month’s tease. While short-term data is notoriously erratic, the numbers have been improving for about a year, said the state’s fiscal economist, Kenneth Heaghney of Georgia State University’s Andrew Young School.
Revenues for the fiscal year so far are 9.2 percent above those of the previous fiscal year.
To smooth out volatility, he tracks a three-month average for revenues, he said. “It hit positive territory last March and has not seen negative since.”
Despite the job numbers, the revenue data proves that the recovery has momentum, he said. “Wages and salaries have been growing for four straight quarters. It is not robust growth the way it was in 2004-05, but we do seem to be clearly out of the trough.”
But therein lies the rub: Growth is not as strong as in previous recoveries.
While the national recession officially ended in June 2009, Georgia’s rebound has been weaker than most. That, economists say, is largely due to the burden of carrying a nearly comatose construction sector while nursing a sickly market in real estate.
While those economic engines suffer, overall improvement will be sluggish.
Georgia has some advantages that could keep it from backsliding, said Doug Bachtel, professor of housing and consumer economics at the University of Georgia.
Despite the recession, a pipeline of new residents has supplied economic fuel, he said. “Since the 1960s, 60 percent of Georgia’s [population] growth has come from people moving in. The trend has not changed. Georgia is still experiencing significant population growth. And that is one reason that [tax] revenues keep going up.
“In-migration is a real engine for economic growth. Those new people spend.”
Yet there are other forces that could undercut recovery.
Most dangerous is the cost of energy. In just a month, the average price of gasoline in metro Atlanta has climbed from about $3 to nearly $3.50 a gallon — most of the added spending leaves the area, if not the country.
Higher oil prices have not always meant recession, but a spike in oil has escorted most recessions of the past five decades.
Economists differ on how high those prices must rise — and how long they must stay there — to work the economy back into a tailspin this time. And there is hope that prices could retreat, if the Middle East crises ease or if Saudi Arabia just pumps more oil.
But, barring a long and punishing rise in energy, the revenue numbers make a persuasive case that the Georgia economy is moving in the right direction, said economist Donald Boyd, a senior fellow at the Rockefeller Institute of Government in New York.
“What we clearly see is a broad recovery — not strong, but broad,” he said. “It is likely to continue to improve and also likely to be weaker than the recoveries after past recessions.”
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