While the Great Recession officially ended in 2009, Georgia’s unemployment will continue to be high, and another recession could be on the way.
This was part of the message at the annual Middle Georgia Economic Outlook on Tuesday, attended by about 250 people at the Wilson Convention Center in Macon.
Slow growth will remain the mantra in 2012, said Dean Robert Sumichrast of University of Georgia’s Terry College of Business, who provided the forecast for the state.
“We might see continued slow growth or technically, we might see patches of recession,” he said. “Either way, unemployment will remain high.”
Even though net employment in the state is projected to increase by 20,000 jobs this year -- and it will be the first annual gain in employment since 2007 -- it would only be 5 percent of the total jobs in Georgia lost because of the recession.
“That won’t help Georgia’s unemployment rate improve much,” Sumichrast said. “It will average just over 10 percent in 2012.”
The risk of another recession is higher this year than it was last year, he said.
“Consumer confidence is very low and that alone could cause the recovery to fizzle out,” he said. “Historically, policy mistakes are the most common cause of back-to-back recessions. ... On the plus side, if the economy moves into a recession, it will not be a long or deep recession.”
Trip Shinn, professor of economics at Macon State College and associate director of the Center of Economic Analysis, said there were “a few bright spots” in the local economic data. Shinn provided the forecast for Middle Georgia.
Initial claims for unemployment have been dropping for the past year in Macon and Warner Robins metropolitan statistical areas, Shinn said. Macon’s MSA comprises Bibb, Crawford, Jones, Monroe and Jones counties, and the Warner Robins MSA is for Houston County.
“Employment and unemployment tends to be kind of a lagging indicator,” he said. “When a recession ends, unemployment doesn’t start falling immediately.”
The economic situation in Warner Robins is usually better than in Macon because of Robins Air Force Base but not recently, Shinn said. Non-farm employment has been growing in Macon, not very fast, but at least it has not been dropping like it was during the recession, he said.
“I’m sort of surprised it’s down for Warner Robins, but I don’t expect that trend to continue unless ... there is a big hit (in federal defense spending that affects the base).”
The construction industry continues to suffer. There has been a “downward spiral” in building permits for single-family homes in the Macon and Warner Robins MSAs since 2007, Shinn said.
Robbo Hatcher, with H2 Capital Inc., a Macon private investment company, said after the meeting that the outlook was “consistent with what I expected.”
“This has been a particularly deep recession for Georgia and Middle Georgia in particular because of our larger exposure to the construction industry,” Hatcher said.
While there has been a slight upward trend statewide in apartment construction, that could be due to people wanting to rent after losing their homes to foreclosures, Shinn said.
Despite some less than bright spots in the economy, Shinn said some business people he contacted were “cautiously optimistic” about 2012.
Walt Miller, director of operations for Giga Inc., a Macon defense supply company, said after the meeting he wasn’t surprised at the lack of a more optimistic tone by the speakers.
“I would love to come away and say that I was not only encouraged as a business owner but I was encouraged by the comments of an economist of a bright and cheerful 2012,” Miller said. “That is what I would like to report, but that is not what I heard. I think (Sumichrast) pitched about an optimistic view as he could have given what he sees.”
Sumichrast said some business owners say they are “sitting on the sidelines” until the presidential election this fall.
“When there is an election of a new president there is almost always a sense of optimism,” Sumichrast said. “I don’t think beyond a very short period of time ... it won’t mean very much unless we see some real changes in legislation. One of the problems we’re seeing right now ... are things like excessive regulations and great uncertainty in terms of future regulations. ... We need a credible plan to reduce the deficit ... over the course of several years. ... Regardless of who the president is, I don’t think we are going to make a lot of progress and have businesses ready to invest very large amounts of cash they have on hand right now.”
Hatcher said recovery from the recession has been slow so far and as was forecast at the meeting it should continue to be slow.
“In my opinion, regulatory uncertainty is playing a larger role than monetary policy and I think that was clear in the message we heard,” he said.
Miller agreed that the government regulation issue was something a lot of business people are worried about.
“The headwinds of government regulation are something that if you get in the midst of business owners at any level, it will be the subject of great debate,” he said. “It is a significant headwind. It doesn’t matter if you are talking about immigration or the environment or just about any reporting requirements.”
Miller also agreed that businesses are not going to expand until there is greater demand for their product or that they have confidence there is going to be greater demand for their product.
“None of them have that,” Miller said. “I’m in the defense supply business, and there is no bright light in my business at all.”
To contact writer Linda S. Morris, call 744-4223.