The coming year will probably extend the long economic expansion in Georgia, but the odds of a recession are rising, according to the annual University of Georgia forecast issued Wednesday.
The state’s economy, which has grown for nearly seven consecutive years, will continue to surge through 2017 faster than the national average, adding roughly 93,000 jobs, according to the report by Benjamin C. Ayers, dean of UGA’s Terry College of Business.
“Many of the same forces that contributed specifically to Georgia’s growth in the past two years will be even stronger in 2017,” Ayers said. “Job growth will be very balanced.”
The state benefits from relocations and expansions of corporate headquarters, as well as tech centers, which mean higher-paying jobs.
Georgia’s economy will expand 3.2 percent during the year, faster than the national pace of 2.6 percent, he said. Non-farm employment will expand by 2.1 percent, he said, which – with 4.4 million jobs now, translates to 92,610 new positions.
Ayers spoke in Atlanta to about 700 business people, government officials and members of various business groups, the first of nine such presentations around the state. The forecast was prepared by the UGA’s Selig Center for Economic Growth and its director, Jeffrey Humphreys.
Despite the generally upbeat outlook, the current chance of recession – one-in-four – will rise to slightly more than one in three, Ayers said.
Financial markets would be the most likely trigger for recession, since a plunge in bond prices would jolt confidence, savage many investors’ portfolios and send interest rates soaring.
There are other potential culprits as well, he said.
For example, Georgia exporters could be badly hurt if the incoming president raises tariffs and sparks a trade war, Ayers said.
Georgia’s economy depends on the commerce and logistics of seaports in Savannah and Brunswick, the massive Hartsfield-Jackson International Airport and the export of Georgia-made goods.
About one of every dozen jobs – about 367,000 – are, “in some way dependent” on the ports, he said. “It’s a mistake to believe that a more isolated economy would be good for Georgia.”
Other dangers include a return to huge and unrestrained government deficits, which could spur high interest rates. And until the new president’s policies are set, sheer uncertainty will weigh on business decision-making, he said.
Still, the odds are that most forces that propelled Georgia the past couple years will carry over into 2017, he said. Ayers cited projects already in the pipeline, a healthier housing market, continued population growth and a solid manufacturing sector.
“Manufacturing has added 45,000 jobs in seven years,” Ayers said. “That obviously doesn’t replace all the manufacturing jobs that were lost in the years before, but we are heading in the right direction.”
A rising population is a key ingredient in a growing economy – helping to spur the dramatic expansion of the 1980s and 1990s. However, the brutal recession starting in late 2007 largely choked off the flow of new residents.
Thomas Cunningham, chief economist for the Metro Atlanta Chamber, told the audience that bolstering the number of transplants is not enough.
“What we need is to get talented people here,” he said. “There are almost a quarter-million students enrolled in schools here. The issue is, how do we retain them?”
A national study shows that “we come up short in terms of retention,” Cunningham said.
Moreover, the region has not done as well as it did during the 1990s in attracting skilled workers from other places, he said.
Cunningham argued one way to keep skilled people and ambitious companies from coming to town would be to pass laws that might discourage diversity and tolerance.
“If there’s legislation that encourages discrimination in any form, we could end up on a negative growth path before long,” he said.
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