Greg George, associate professor of economics and director of the Center for Economic Analysis at Macon State College, was asked to put a Middle Georgia perspective on the economy. George also is chairman of the Middle Georgia Economic Advisory Council, which advises the Atlanta Federal Reserve on local economic conditions.
QUESTION: What do you think of the latest GNP report and how does it reflect what is happening with the Middle Georgia economy?
ANSWER: The things we are hearing from our business contacts reinforces what we are seeing coming in the national numbers. Things are not getting better like we would like to see them. Probably in the last quarter, things have gone from cautious optimism to pessimism. We were kind of hoping things would get better after awhile and that it was the beginning of the end. Now we are starting to worry that there are a couple of lingering problems out there.
QUESTION: What are the bright spots in the local economy, if any, and what are its continued challenges?
ANSWER: We do have Robins Air Force Base as the economic engine for the region. Other growth areas are health care and education and we are strong in those areas. So we have the foundation in those areas for a healthy recovery.
Even though the housing market is shaky — and we probably haven’t seen the end of the housing issue — one good thing is that Middle Georgia didn’t experience the dramatic run ups in real estate values as you had in Florida, California, Arizona and Michigan so we haven’t fallen as hard and there is not as much room to fall here. Even though the housing market is still in bad shape, it’s not as bad as it could be. So I guess that’s a reason to be optimistic.
Nationally and in Middle Georgia, one of the biggest problems is the mismatch between workers skills and the skills required for the jobs that are available. It won’t get solved quickly. You don’t take high school dropouts and make them into nurses overnight.
QUESTION: What about the rest of Georgia? What are the bright spots and what are the concerns?
ANSWER: What I’ve found is that this has been a very good year for agriculture. Peaches and pecans, in particular, have been very lucrative this year. Prices are stable and crop yield has been high. That’s a highlight for the state and Middle Georgia as well. Otherwise, you have a mixed bag. Some areas have been hit hard. The real estate market in Atlanta has been hit extremely hard and the banking industry especially around north Georgia. Those areas are going to take longer to recover. Some of the coastal areas did well because the Gulf Coast oil spill caused more people to come to Georgia.
Again it’s a mixed bag and if you put on top of this, what if we go into a double-dip recession nationwide, that’s going to have spill over effects in the state.
QUESTION: Macon is on a list of 22 cities Moody’s identifies as likely to face a double-dip recession? What is your view of that report? That report also suggests a double-dip recession may spread more broadly; what does it say about other communities, such as Warner Robins?
ANSWER: I think you have to be careful with those kinds of reports because without understanding the local economy, the numbers can be deceiving. I don’t know exactly what formula they were using to come up with that assessment, but it’s likely it didn’t capture everything important in the Middle Georgia area. ... That’s not to say they are not right. I’m still pessimistic, not just about Macon, but about the country, but I just don’t put a lot of weight in things like that. By looking only at the metropolitan statistical area, they assume Robins Air Force Base will only help out the Warner Robins MSA, but everybody here knows that the base is an integral part of the Middle Georgia economic engine.
QUESTION: Recent housing reports have also been bleak. One local realtor said existing home sales in Middle Georgia were worse than the national average. What is your thinking about the housing picture?
ANSWER: It’s not that our housing market is doing well ... it’s that we didn’t experience the dramatic run ups in housing markets that you saw elsewhere, so we didn’t have as big of a collapse. I’m not saying that the local market is healthy. There are still a lot of people who are underwater on houses and are unable to sell or refinance, still lots of inventory, still foreclosures — there are still issues in the housing market. Those things are the same everywhere across the country pretty much.
QUESTION: Lack of hiring seems to be a continuing obstacle to economic growth. What is happening on that front in Middle Georgia?
ANSWER: Again, we have high unemployment. Right now if you have a college degree, the unemployment rate is not that bad, but if you are a high school dropout, it’s like a 17 percent unemployment rate for you. So, there is a mismatch between the jobs available and the skills of the workforce overall. I’ve heard stories of people quitting to take unemployment benefits because it paid better than their jobs. That’s not the way we want to go. So we have a policy that is causing some distortion like that.
QUESTION: What do you think of Chairman of the Federal Reserve System Ben Bernanke’s latest plan to bolster the economy if it slumps further?
ANSWER: They are poised to take more dramatic steps to try to help stimulate the economy. They haven’t fired all the arrows in their quiver yet. But they are going into uncharted territory. There is concern among economists that we may be facing these deflationary pressures and a double-dip recession, and I think the Fed is trying to prevent that from happening — that’s their worse case scenario. Hopefully, whatever they decide to do, works. The other possibility is that we may incur some inflation — maybe not in the near term, but in the longer term and that’s another concern the Fed is aware of and that economists talk about. So I think they are doing what they can to try and get us out of the immediate potential problems hopefully without creating future problems.
It’s very dicey and it’s probably impossible to get it right. ... We are forced at this point and time to be reactionary and that’s always problematic, because you can always overdo things and suffer unintended consequences down the road. This is an unprecedented time for the Fed. Their balance sheet is a lot different than it’s ever looked so they are in an uncharted territory.
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