Right on schedule, the metro Atlanta economy hit the mid-summer doldrums, but it will take a few months to know whether these blahs are seasonal or the start of a deeper slump.
Because for bad news, it still looks pretty good.
Talk of recession has quieted as most of those looking for work are getting hired: the unemployment rate fell last month to a historically low 3.2%, down from 3.4% in June, the Georgia Department of Labor said Thursday.
That happened even as the region lost 14,100 jobs, the department said.
That disconnect is actually pretty normal. Metro Atlanta typically loses jobs in July. Factories take summer breaks, school is still out and many executives take vacations, putting their hiring plans on hold. Knowing all that, some people put a pause on their job search, which means they’re not counted as unemployed.
But this summer, there’s also an ebbing but pesky inflation and climbing interest rates. Those higher rates make loans and credit cards more costly, which discourages consumers from spending and companies from expanding.
So far, the Atlanta economy has kept chugging, adding 52,300 jobs over the past year, convincing even pessimists to paint pictures in a rosier hue.
Odds of a recession remain, but they’re much lower, said Amy Crews Cutts, economist consultant to Duluth-based Primerica, which provides financial services in the United States and Canada. “In January, I said 90%. Now, I say 55%.”
Many of the metrics used to measure the job market look good.
The number of people in the Atlanta workforce actually grew faster in July than in June, said economist Loujaina Abdelwahed of Revelio Labs, a New York-based firm that analyzes labor data.
The pace of hiring is still higher than that of people leaving jobs, she said.
For months, many employers complained of a labor shortage, which amounted to a large number of open jobs in a time of low unemployment. Companies found themselves paying higher wages and permitting flexibility like remote work.
The balance between openings and jobseekers has shifted somewhat, but still provides workers with more negotiating power than they typically have in a time of higher unemployment.
The number of job postings in metro Atlanta on Indeed are down 20% from a year ago, according to Nick Bunker, an economist with the employment site. It is still above pre-pandemic levels.
“The U.S. labor market has come off the boil, but it’s still simmering,” he said in a post earlier this month.
Several sectors posted strong growth, especially hospitality and real estate, the Department of Labor said. And while some weakness is seasonal, much of the strength is long-term.
Mark Rayfield, chief executive of Saint-Gobain North America, said his company has 600 workers in the state and plans to grow to more than 1,000 within two years, with much of the hiring in and around metro Atlanta.
The company makes materials for the housing market and has been rapidly expanding in Georgia to serve Southern markets, he said.
Higher rates may temporarily stymie the market, but the need for more housing is massive, he said. “We have been very bullish on the housing market. The U.S. and Canada are underbuilt in their housing by 3 to 6 million homes.”
Despite two years of the Fed trying to slow the economy The demand for good workers has edged down, but only a little.
“Labor has been everyone’s largest challenge,” Rayfield said. “We are not a high-tech company, but we are competing with high-tech companies for engineers.”
Housing fuels a large part of the economy, sparking the need for labor, materials and various services. Even when sales of homes are slow, homeowners have to spend money on what is often their largest asset.
“A house is something that always needs maintenance and constant repair,” said Vandana Iyengar, owner of the franchise for Handyman Connection in Alpharetta.
She has about a half-dozen employees, but is always searching for diligent, trustworthy workers. “I am always hiring and hiring is not that easy. The more guys I have, the more jobs that I can do.”
What is most worrisome is the pressure on growing companies, said Christopher Fagan, partner at Atlanta-based CPA and advisory firm Moore Colson.
“What gives me heartburn is when you look at the interest-rate increases,” he said. “The issuance of loans hasn’t stopped, but it has slowed down significantly.”
With its imprecise weapons, the Fed targets inflation, but often damages the finances of companies and consumers in ways that can cause personal hardship, layoffs and eventually a recession.
“Everyone knew there would be collateral damage,” Fagan said. “I don’t know if we are at a tipping point.”
Metro Atlanta, job change, July
Best*, pre-pandemic: 28,400 (1996)
Worst, pre-pandemic: -23,600 (2008)
Average, pre-pandemic: -9,600
Recent: -14,100 (July, 2023)
Metro Atlanta, unemployment rate
Best, pre-pandemic: 2.6% (Dec. 2000)
Worst, pre-pandemic: 11.1% (June 2009)
Recent: 3.2% (July 2023)
*Between 1990 and 2020, July was a positive month for job growth just three times: 1992, 1996 and 2004.
**Metro job numbers are not seasonally adjusted to account for seasonal patterns.
Sources: Georgia Department of Labor, Bureau of Labor Statistics