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Experts predict recession's end

Photo by Avan Clark

Photo by Avan Clark

ALBANY -- Coming out of the ashes of 2009, experts predict that the recession has bottomed out and this year will be characterized by stabilization and growth.

Roughly 150 business and civic leaders were present to hear that message at the University of Georgia Terry College of Business Economic Outlook luncheon at the Hilton Garden Inn in downtown Albany Thursday.

In Albany, the unemployment rates were fairly close to the state's rates in 2009, which isn't necessarily a bad thing.

"It's not bad to be about average," said Beata Kochut, research analyst with the UGA Selig Center for Economic Growth.

In 2007, per-capita income in Albany was approximately $25,000, which is 67 percent of the national average. In that same year, average unemployment was 5.1 percent, a number that was twice as high in 2009.

While the numbers appear sobering, many metropolitan areas have had the same problem since the recession's onset.

"Many metropolitan statistical areas have numbers just as bad," Kochut said.

Albany's suffering also stems in part from an industrial collapse in 2001, from which the local economy never fully recovered.

"The area held more jobs than the national level, but the area continued to lose them through the decade," Kochut said.

Some sectors added jobs in Albany during 2009, which indicates economic building blocks have been put into place. Even so, there are some steps that need to be taken.

"We should not rely on one industry to pull us out," Kochut said. "An educated, flexible work force will be the key."

Currently, experts say Albany still has enough of a presence, specifically in the manufacturing and service sectors, to transition.

"The remaining manufacturing facilities seem to be doing well so far," Kochut said. "The economy will likely pick up in the second quarter. As the economy improves, the service industry will have room to expand."

Last year's forecast by the UGA Selig Center predicted the recession would last 18 months, which came to pass with the statistical end of the recession arriving this past June. However, what has followed since then hasn't felt much like a recovery for most people in Georgia.

"In fact, we still feel awful," said Robert Sumichrast, dean of the Terry College of Business. "Employment is declining. Non-residential property is plunging. Consumer spending is restrained. Capital needs reallocation. And on top of all that, the banking system is not completely fixed, with too many banks still holding onto assets that are clearly distressed.

"Despite this list of concerns, our forecast is for the recovery to be sustained."

Sumichrast went on to say that recovery will be slow and bumpy, and that the state's economy will likely underperform the national economy until real estate and construction stabilize sometime in 2011.

He also said that while job losses would likely turn a corner this year, the doldrums are not over yet.

"Georgia will end up losing about 370,000 jobs over the course of this recession. That's more than twice as many jobs as we lost in the previous recession and represents 8.9 percent of total employment," Sumichrast said. "Even though job growth in Georgia will finally turn positive next spring, it will be too weak to keep pace with the number of people entering the job market."

Georgia's unemployment rate will continue to rise, topping out at 11 percent in mid-2010, he said.

On the national level, experts predict that it will be midway through 2011 before the gross domestic product completely recovers.

"It will take two additional years -- that is 2013 -- before the labor market replaces the 7.5 million jobs lost during this historic downturn," Sumichrast said. "Only then will the U.S. economy be fully healed."