Selig Center of Economic Growth Director Jeff Humphreys of UGA's Terry College of Business delivers the Annual Georgia Economic Outlook to Albany officials Thursday. Humphreys said that buoyed by rising home prices, smart economic policies and new jobs, Georgia's economy will will rise more than the national average this year. (Staff Photo: Terry Lewis)
ALBANY — Boosted by rising home prices, smart economic policies and new jobs, Georgia’s economy should grow more than the national average next year.
That was the message delivered by the University of Georgia’s Terry College of Business Selig Center for Economic Growth Director Jeff Humphreys during Thursday’s Annual Economic Outlook Series at the Hilton Garden Inn.
“Economic development growth, continued recovery in the housing market and more favorable demographics, will fuel this recovery,” Humphreys said. “The fastest job growth will occur in construction followed by professional and business services, and mining and logging.”
According to the Selig Center, Georgia’s inflation-adjusted GDP will grow at 3 percent this year, with an influx of 1.8 percent more jobs. In contrast the nation’s GDP will see a 2.3 percent growth rate overall with 1.5 percent increase in jobs.
“Last year the state’s growth was more modest with the economy growing by two percent,” Humphreys said. “The changes are due in large part to development policies like the Georgia Legislature’s deal closing fund which provides incentives to help Georgia make up the jobs lost in the Great Recession by the middle of next year.”
One factor behind the base of job growth is the slight uptick in manufacturing activity, which Humphreys said was noteworthy given that since the turn of the millennium Georgia has lost four out of every 10 manufacturing jobs.
“In 2012 and 2013, we’ve seen major project announcements in aircraft, automobile, construction equipment, life sciences and flooring manufacturing,” he said. “In addition, at 1.3 percent, Georgia’s population growth will outperform the national average of 0.9 percent. The influx is due, in part, to heavier migration to the state. In the next year about 61,000 people will move into Georgia, up from 29,000 in 2009.
Humphreys, however, warned that there are a couple of possible pitfalls along the road to full recovery, pointing to reduced federal spending and the state’s lagging educational system.
“While the state’s private sector will be growing in 2014, the public sector will drag because federal spending makes up a higher-than-average portion of the state’s GDP at 6.9 percent,” Humphreys said. “Reductions in defense spending will be particularly harmful, as many Georgia communities heavily rely on military bases for their economic lifeblood. In addition, we still lag the nation in K-12 education, with eighth-graders ranking 40th among states in math, 34th in reading, 31st in science and 27th in writing.
“The failure to educate our children is finally starting to show up in the statistics.”
Research analyst Beata Kochut then delivered an assessment on the outlook for the Albany MSA (metropolitan statistical area).
“On an annual average basis, the forecast indicates that the Albany area will see employment rise by o.3 percent, or by about 200 jobs. That is a small number, but it is improvement,” Kochut said. “However, having a high proportion of government jobs makes Albany vulnerable to the restructuring of government. Another problem is that the area’s population and labor force have been declining and will continue to do so.
“Also, compared to the state average, Albany has relatively fewer people in the 25 to 49 age group, which are typically the most productive years professionally.”
Kochut added that because Albany is a small MSA, the actions, for better or for worse, of one company probably will probably determine the area’s actual economic performance.
“One economic stabilizer is that much of the area’s manufacturing base is geared toward basic consumer staples, which households continue to buy despite the economy” Kochut said. “Also, Albany’s increasing role as a regional center for health care and education also weighs heavily in its favor, but the growth of both of those industries will be limited by the area’s sub-par population growth.”