The Great Recession battered Georgia harder than most states, but the economic recovery here should surpass the nation’s next year, University of Georgia forecasters predicted Thursday.
“We will outperform the average state in 2013,” Robert Sumichrast, dean of UGA’s Terry College of Business, told hundreds of businessmen, politicians and academics Thursday at the Georgia World Congress Center. “The massive restructuring of the state’s private sector is complete and the real estate bubble is over.”
The economist predicted Georgia will achieve a 2.1 percent growth rate next year, compared with a national growth rate of 1.8 percent. That would reverse several years in which Georgia largely lagged the nation in major economic measures such as job losses, home values and personal income.
The UGA forecast cites a dropping unemployment rate, strengthening job growth and a mild rebound in home values, which it expects to grow 3 percent to 5 percent.
Albert Niemi Jr., a former Terry College dean, anticipates national economic growth of 1.9 percent next year, down from 2.1 percent in 2012.
“Essentially, there will be no change in the national outlook,” Niemi, current dean of Southern Methodist University in Dallas, said during UGA’s annual gathering. “The sluggish recovery is painfully slow — the slowest since the Great Depression.”
Forecasts are like snow flakes; no two are alike. Georgia State’s Rajeev Dhawan, for example, predicted two weeks ago that the nation will notch only a 1.5 percent growth rate next year, before rebounding in 2014. The Federal Reserve, more in line with Sumichrast, expects growth of at least 2.5 percent.
Georgia typically has notched an unemployment rate a full percentage point higher than the national average since the recession. And few states suffered a housing collapse as bad.
“We had the worst number of housing starts since the Great Depression,” said Niemi, noting the damage done also to North Georgia’s carpet and flooring industries. “Housing is arguably the most critical industry to the state of Georgia. It’s what makes Georgia go.”
A survey of financial executives across metro Atlanta showed “increasing optimism” in the outlook for the nation’s economy, according to a recent survey by KPMG. About 55 percent of the executives expect the economy to improve. A year ago, only 43 percent did, the audit tax and advisory firm reported separately this week.
Like the economists, though, executives remain wary of the fiscal cliff issue being hashed out in Washington, a financial implosion in Europe or war in the Middle East. Bill Kimble, managing partner for KPMG in Atlanta, cautions not to expect an acquisitive, economy-boosting streak from Atlanta’s cash-flush companies.
“They say, ‘Let’s put our money into the company and make it more efficient instead of going out and buying another company,” Kimble said Thursday. “But if we deal with the fiscal cliff problem, then I think CEO’s will start doing deals.”
Georgia’s unemployment rate dipped to 8.7 percent in October from 9 percent in September — the largest month-to-month drop in 35 years. Sumichrast expects a net gain of 53,000 jobs next year. Eighty percent of KPMG respondents said they’d either hire or maintain current employment levels.
Metro Atlanta home prices rose for the sixth straight month in September. UGA economists predict that single-family home starts should also rise by almost 20 percent next year as renters become buyers and newcomers — a net migration gain of 61,000 people — go house hunting.
Sumichrast and others expect 2012’s run of services, manufacturing and hospitality job announcements to continue into 2013. Caterpillar, for example, expects to bring 1,400 jobs to the Athens area. Baxter International announced 1,500 jobs for Covington. State Farm could add 500 jobs in the Perimeter.
“Due to cost, logistics and tax advantages, Georgia remains very competitive with other states when it comes to landing economic development projects,” Sumichrast said. “These advantages are beginning to bear fruit.”
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