Georgia’s economy will grow faster than its long-run average for the first time since the Great Recession, thanks to increased job growth, rising home prices and a solid economic development strategy. That was the message delivered by Benjamin C. Ayers, dean of the University of Georgia Terry College of Business, at the Georgia Economic Outlook on Dec. 12 in Atlanta.
“This will be a positive change from what Georgia has experienced in recent years. Specifically, we expect Georgia’s GDP to grow by 3.2 percent in 2015,” Ayers said. “That’s higher than Georgia’s long-run rate of GDP growth of 2.9 percent, and exceeds the 2.8 percent growth we expect from the nation as a whole.”
According to the forecast, which was prepared by the college’s Selig Center for Economic Growth, jobs in Georgia will rise by 2.3 percent throughout the next year, completely replacing all the jobs lost by Great Recession by mid-year. Comparatively, the U.S. as a whole will add 1.8 percent more jobs.
Douglas Handler, the chief North American economist for IHS, delivered the national forecast at the event.
Georgia’s biggest job gains will come from the construction industry, followed by professional and business services, and mining and logging, Ayers said. The education and health care fields will see modest growth, while the only sector to lose jobs will be the government.
Increases in home prices, a crucial economic engine for entrepreneurs, combined with more favorable demographic trends will help Georgia’s financial institutions. Other economic drivers, such as the Savannah Harbor Expansion Project, renewed in-migration to Georgia and plummeting domestic natural gas prices, will sharpen the state's competitive advantage.
Although unlikely, the state's risk of recession is 25 percent. It's vulnerable to federal spending cuts and Federal Reserve Policy, Ayers said.
“Federal spending accounts for only 11.3 percent of Georgia's GDP, which is below the U.S. average of 16.2 percent,” Ayers said. “Nonetheless, Georgia's military-base communities are extremely dependent on federal dollars. In fact, Georgia's dependence on military spending is nearly twice the U.S. average.”
“If the Federal Reserve policy shifts from an accommodative stance to a more restrictive stance, it will create more economic drag in Georgia than in other states because Georgians carry relatively more debt and relatively less savings,” he added.
“In addition, interest-saving economic sectors, such as construction, real estate development, building materials manufacturing and forestry have a relative greater impact on Georgia's overall growth than on the nation's.”
Ayers also outlined two proposals to bolster further growth in the state's manufacturing sector.
“First, we must develop a much better educated and highly skilled workforce that's fully capable of using the latest manufacturing technologies,” he said. “Manufacturers no longer hire forklift drivers or assembly-line workers. They hire employees who understand computer-aided design and production systems.”
“Second, we need to continue passing economic development that makes Georgia more competitive with other states when it comes to landing economic development projects,” he added. “In 2012, the Georgia legislature created a large deal-closing fund and sales tax exemptions for energy used in manufacturing. Since then, we won an increased number of relocation and expansion projects.”
The entire Georgia Economic Outlook report is available for purchase online at terry.uga.edu/selig.
The Atlanta event was the first in a series of economic forecasting events to take place across the state. It continues in Savannah (Jan. 14), Augusta (Jan. 15), Athens (Jan. 21), Jekyll Island (Jan. 28), Swainsboro (Jan. 30), Albany (Feb. 5), Dalton (Feb. 10), Macon (Feb. 12) and Columbus (Feb. 13).
For more information or tickets to future events, visit terry.uga.edu/eo.