When reviewing the economic prospects for the Albany area in 2013, they can be described as stable, but highly susceptible to market shocks. Referring to last year, despite seeing a Georgia economy finally growing at a faster rate than their regional counterparts, our area lagged. Despite Albany’s seasonally adjusted unemployment rate falling from 10.1 percent to 9.5 percent over the last year, there was no net job growth in 2012.
That suggests that the lower unemployment rate was more indicative of people dropping out of the labor force, rather than a stronger job market. Contrast that with the state of Georgia, which saw its seasonally adjusted unemployment rate fall by a greater rate from 9.4 percent to 8.6 percent and also experienced positive net job growth at 1.9 percent.
If not for external risks nationally and globally, there would be more reason for more optimism in 2013. The housing market is starting to show signs of life and business confidence was starting to rise. Both factors generally lead to future job creation and expansion. However, outside factors, such as U.S. congressional gridlock and global economic malaise, are a drag on local job market prospects. Even if Congress is able to reach an agreement by March before the sequester takes place, damage has already been done with industry still hampered by tax and regulatory uncertainty.
On the positive side, there are a couple of factors to point to, in addition to our low cost of living and wealth of natural resources.
First, our primary employment anchors appear to be on solid ground. Our Marine Corps Logistics Base remain a strong presence within our local community and should be positioned well. Even if the sequester takes place, which would result in significant cuts to defense spending, it is not expected to impact us that much locally. Most of their activity involves maintenance and repair, which actually could rise if, as expected, the Pentagon cuts its purchases of new aircraft and equipment.
Then there are MillerCoors and Procter and Gamble, who have been manufacturing anchors in our community. MillerCoors represents an industry that is not susceptible to changes in economic activity. Despite some of the recent struggles arising from a recent recession resulting in consumers opting away from name brands to generic products, Procter and Gamble still is positioned in a market where people will buy their products regardless of the economy. Therefore, manufacturing jobs should be stable.
As for challenges, we still need to improve our overall workforce skills and also be aware of state, national, and international factors.
Southwest Georgia continues to be slowed by relatively low workforce skills and declining influence in state government. Even though resources are tight, we must remain vigilant in improving the education and skill levels of our community. With regional population losses, our influence in state legislation has diminished, which can impact regional economic development efforts.
Even though it should be noted that the state of Georgia rebounded during 2012 with job growth rates that were among the highest in the Southeast, we are still burdened with a state unemployment rate that is much higher than the U.S. average and is actually tied with Mississippi for the highest seasonally adjusted unemployment rate in the Southeast at 8.6 percent as of December 2012. Until job prospects start to percolate in Atlanta, it is difficult to expect job growth to expand significantly in Southwest Georgia.
Uncertainty about tax and spending policies from Congress continue to hamper overall business investment in the U.S. Until that is resolved, that will slow efforts to attract out-of-state employers.
The global economy is still volatile, particularly in Europe. Even though it is expected that the global economy will expand in 2013, Europe is projected to contract this year. If that continues, that will limit export opportunities that benefit our agriculture producers. Logistics, transportation, and warehousing industries are all affected when global demand falls.
As we look to 2013, one tool that can be helpful in boosting economic development efforts is the Albany City Commissioners plan to create a deal closing fund financed from MEAG refunds. This deal closing fund would be a financial incentive for firms to relocate to the region and has potential to attract jobs to the area.
Overall, we should not expect more than modest to little improvement within the local job market and that could easily deteriorate if external factors worsen.
Aaron Johnson is the Assistant Professor of Economics at Darton State College. In addition to his teaching duties at Darton, he is a board member for the Albany Dougherty Economic Development Commission and the Albany Dougherty Planning Commission. He also publishes a blog on economic and financial literacy at http://www.econprofaj.wordpress.com, which highlights research sources for this article and others.