Personal income is expected to grow in Georgia, jobs will be easier to find and home prices are expected to go up.
That was part of the message at the annual Georgia Economic Outlook event in Macon Tuesday. Nearly 300 people gathered at the Wilson Convention Center for the final session in a series held around the state.
“This is a good news forecast,” said Benjamin Ayers, dean of the University of Georgia’s Terry College of Business. “The 2017 outlook for Georgia’s economy is quite good. The pace of ... personal income growth will accelerate. Jobs will be plentiful. Job growth will be very well balanced, with gains in both goods producing and service providing industries. Existing home prices on average will rise to all-time highs.
“And good news for the state as a whole — we grow faster than the nation’s economy.”
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The state’s employment should increase by 2.1 percent this year, which exceeds the 1.5 percent increase estimated for the U.S., Ayers said. And Georgia’s unemployment rate for 2017 should average 4.8 percent.
“That’s important because that’s below 5 percent,” he said. “The last time we were at full employment was in 2007.”
The same things that contributed to the state’s growth for the past two years are expected to be stronger this year, he said.
Georgia has even more projects in its economic development pipeline, its economy will get more leverage from the housing recovery than the national economy, the state’s manufacturers will continue to do better than U.S. manufacturers, and Georgia will see faster population growth in 2017, he said.
He said there is also optimism because he believes “there will be less gridlock in Washington. … If leaders get it correct, the country will benefit substantially.”
As always, though, there are a few head winds.
“The strong U.S. dollar and weaker foreign economies will make it difficult for our exporters in the state,” he said. “Higher oil prices will not favor oil-consuming states like Georgia. Low productivity growth is going to limit increases in wages and salaries, and that will impact consumer spending.”
And with a new administration in Washington “there is more economic policy uncertainty. And that uncertainty may impact some business decisions in terms of hiring and expansion. So although we expect growth in 2017, we also expect that the risk of recession is higher in 2017 than it was in 2016.”
The risk of recession last year was about 25 percent. This year, the risk is expected to be about 35 percent.
“So what does the forecast mean to you personally? The good news is it’s not too late to take advantage of the economic expansion in the state of Georgia,” Ayers said.
Five areas where Georgia competes effectively are: headquarters operations, distribution and logistics, new high technology, professional and business services, and TV and movie production, he said. Also, housing and real estate development will be a strong driver of the state’s economy this year. Existing single-family home prices are expected to rise by about 4 percent in Georgia this year.
“I am full of good news today,” he said. “I would say the glass is at least three-fourths full.”
Besides the risk of a recession, Ayers mentioned one other note of caution.
“The possibility of a major economic policy mistake is also a concern,” he said. “A trade war is our biggest concern. ... A trade war would reduce Georgia’s exports, disrupt supply chains, lower productivity and raise consumer prices.”
Midstate economy should improve
Greg George, director of the Center for Economic Analysis and a professor of economics at Middle Georgia State University, took a look at the economy in Middle Georgia.
“The past year has shown significant improvements in the overall economic conditions,” George said. “Prices have remained relatively stable, while the pace of business activity has steadily improved. Construction and real estate have continued their recovery, and the unemployment rate in Bibb County currently sits at 5.9 percent.”
While hiring and capital expenditures remained relatively stable last year, businesses are mostly upbeat about both increasing in the near future, he said. The economy in the Middle Georgia region is expected to continue to improve over the next year “as the pace of economic activity increases and investments begin to spill over from the primary markets across the broader region.”
While the overall economic outlook is positive for Middle Georgia, George said he was concerned about “wage pressure ... as businesses find it increasingly hard to retain workers who have alternative opportunities.” And with reported increases in prices, it could squeeze margins as businesses will find it difficult to pass on increased costs to consumers.
Also, health care and military spending are a large part of the local economy, as well as education spending and financial services, he said.
“The current national political environment has increased uncertainty in these areas and made it difficult to forecast any reliable trends,” George said. Also, while lending conditions have recovered, “a general tightening of credit markets is expected to continue for the foreseeable future. We do not anticipate this will be dramatic, but it may have a marginal impact on lending.”