Over the last eight years, I’ve witnessed big swings in Atlanta’s economy. When I became president of the Federal Reserve Bank of Atlanta in 2007, the economy was booming. We soon learned that economies can reverse momentum quickly. Atlanta’s economy was not as strong in its fundamentals as many thought.
The metro area’s economy shrank by 2.4 percent in 2008 and a further 3.8 percent in 2009, according to data from the Bureau of Economic Analysis. Job losses during those years were more than 160,000 and the unemployment rate more than doubled, going from 5 percent to more than 10 percent.
Atlanta’s recession was especially felt in residential development. A major driver of the region’s economic pre-recession growth was in-migration and home construction. The home-building sector became overextended before the recession and took a nosedive during the recession. Residential building permits issued in the metro area peaked at more than 70,000 in 2005 only to plummet to 6,500 in 2009, according to the U.S. Census Bureau.
Today, the metro economy’s recovery is well established and better balanced than before the recession. Trends in important sectors are quite positive. The business services sector is showing gains. Atlanta is a center of sophisticated knowledge work for the Southeast, the nation and the world.
The metro area is a major logistics and transportation hub and the improving national economy is boosting those sectors. Warehouse development, along with industrial site development on the periphery, are showing strength. Warehouse space under construction has more than doubled from 2013 to 2015.
Home building — still important — is picking up. Sales of new and existing homes and housing starts are up from a year ago. Home prices are also rising. While commercial real estate construction has been slow to rebound, vacancy rates are declining. Multifamily construction is robust, particularly in the city. I see evidence of this every time I look out my window in Midtown.
Atlanta’s economy is better diversified compared to a decade ago. Rising industries are helping to balance the metro economy. For example, we’re witnessing the rise of the fin-tech industry — payments and transaction processing — as well as health care information technology and services. There are several others.
In-migration, a growth driver in earlier times, has resumed. As the AJC recently reported, all 10 metro counties are experiencing population growth accompanied by impressive job growth. Much of that jobs growth has been in higher-quality — that is, higher compensation — employment.
Finally, metro Atlanta workers have enjoyed faster wage growth in recent years compared to the nation as a whole. Rising incomes have supported growth in consumer activity and have contributed to employment growth in industries that directly serve the consumer, such as retail trade, food service and entertainment.
Overall, Atlanta is experiencing a solid recovery. The data clearly demonstrate this. I think it is important for policymakers to understand the ground-level reality behind the data, to have a feel for the texture of economic life the statistics don’t always reveal.
The Atlanta Fed has representatives across the Southeast who regularly meet with business, community and government leaders to take the pulse of local economies. We conduct a variety of outreach programs to keep us in touch with grassroots constituencies. The Bank’s community and economic development team researches issues affecting low and moderate-income neighborhoods, including housing, employment, workforce development and human capital challenges. While data reflect an economy that is putting the recession further and further in the past, grassroots information from our community contacts tells us the recovery has been uneven and challenges remain.
That said, I’m encouraged about Atlanta’s economic prospects. I expect expansion to continue for the foreseeable future. With its better balance, a more diversified employment base, and the growing contribution of young and rising industries, the economy of the Atlanta region is increasingly resilient and should exhibit impressive staying power going forward.
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