The state government’s top economist estimates that Georgia’s economy will rebound strongly in the second half of this year, leading to robust growth next year.
While the country may slip into recession in the next few months, the economy should rebound in the last two quarters of 2008, said Ken Heaghney, the state fiscal economist. Heaghney spoke in Atlanta less than an hour after the New York stock exchange opened with a drop of several hundred points.
“In a time of turmoil like this, I think the answer is to focus on the underlying fundamentals,” Heaghney told joint House and Senate budget committee, which began hearing testimony today on Gov. Sonny Perdue’s budget proposals.
Heaghney, a Perdue appointee and research economist at Georgia State University, said Georgia will not be as badly hurt by the national housing crisis as some other regions. The state missed the rapid run-up in prices that has led to a crash in home values elsewhere, he said, and likely will fare as well or better as the nation in terms of housing markets.
Perdue told the committee that his fiscal 2009 budget, which projects 5.2 percent general revenue fund growth over the previous year, prudently funds state programs, “in a way that will help those who can’t help themselves, but won’t waste money. Value is my watchword.”
Fiscal Year 2008 is expected to end June 30 with a 2.8 percent increase in the general revenue fund over the previous year.
Heaghney said as the housing market bottoms out, and a weak dollar promotes exports, the state and nation should see an economic rebound in the second half of next year. Job growth is expected to pick up, and consumer spending will increase from the current moderate growth levels.
Some lawmakers were skeptical. “I appreciate your confidence,” said Rep. Ben Harbin, R-Evans, chairman of the House Appropriations Committee. “I’d rather come back with a robust mid-year [adjustment], rather than have to come back and deal with [budget cuts].”
-- Mike Billips