UGA economics team predicts 2015 improvement for Georgia | VIDEO

ALBANY — While experts predict an improved economy for Georgia in 2015, factors including demographic shifts and decreased agricultural profits could potentially hamper economic growth for Albany and southwest Georgia.

Economists discussed those predictions and more Thursday at the Albany stop of the annual Georgia Economic Outlook Series presented by the University of Georgia’s Terry College of Business.

Mobile users can see the video of Mark Masters’ presentation here.

Benjamin Ayers, dean of Terry College of Business, began the presentation by highlighting his predictions for Georgia during 2015, which he said were optimistic.

Ayers said that the state will continue to recover from the recent recession at a moderate pace, citing job growth, rising home prices and a solid economic development strategy as the key factors for that growth. He also said that the state as whole is experiencing what he called a “manufacturing renaissance.”

“There’s been a renaissance in manufacturing activity and that’s especially noteworthy,” Ayers said. “If you think about the last decade, Georgia lost four out of every 10 manufacturing jobs that it had, about 200,000 manufacturing jobs. However, in the last years we’ve seen new manufacturing projects announced in the following industries — aircraft, automobile, construction equipment, life sciences and the flooring industries.”

Ayers attributed much of that renaissance to the United States becoming more competitive with China due to a narrowing of the gap in the cost of manufacturing and because more companies are putting a greater emphasis on other factors related to manufacturing such as risk management, quality control and intellectual property rights.

Georgia should benefit from that shift, Ayers said, due to a positive environment in which to do business, bolstered by proactive legislation that makes it easier for companies to locate and to business in Georgia.

“Our strengths are the low cost of doing business, a favorable tax structure, as well as competitive economic development,” Ayers said. “Each of these factors will help Georgia (gain) more relocation and expansion projects in the coming years.”

While the state outlook was positive, there is cause for concern in southern Georgia, where changes in demographics and reduced agricultural profits could have an impact.

Beata Kochut, a research analyst for the Selig Center for Economic Growth at Terry College, focused her part of the presentation on the economic climate of south Georgia, primarily the Albany Metropolitan Statistical Area, which is made up of Dougherty, Lee, Baker, Worth and Terrell counties.

Kochut said that one of the biggest areas for concern in the Albany MSA is changing demographics. Between 2010 to 2013 there has been a decline in overall population, with the exception of Lee County which saw a 2 percent increase. There has also been a decline in residents ages 35-54, as well as a rise in residents ages 65-74.

Lack of population in what is generally considered the most productive working years could prevent the MSA from taking advantage of the “manufacturing renaissance” Ayers mentioned. That decline also stalls growth in demand for goods and services.

“In areas with growing populations an increased number of households produces demand for locally sold goods and services and fuels growth,” Kochut said. “That engine of growth is not going to push Albany’s economy significantly forward.”

However, Kochut did point out that unemployment has remained stable over the past two years, which is a plus. She also said that there are also benefits to a reduced number of households.

“Smaller population has some positive sides too,” said Kochut. “It puts less stress on local resources and more resources are available per capita basis. Also a weak local demand keeps prices down which has made Albany MSA one of the more affordable areas in the country.”

Perhaps an area of greater concern for the regional economy in 2015 is a predicted decline in agriculture income, as the price of three of the area’s largest commodities of peanuts, corn and cotton decline.

Mark Masters, director of the Georgia Water Planning and Policy Center at Albany State University, explained to the audience that agriculture would continue a trend that became apparent in 2014, which saw farmers impacted by prices.

“We were sort of retreating from those across the board highs for the crops that we grow down here, chiefly peanuts, corn and cotton,” said Masters. “We kind of implied that farm gate values were going to go down, our net returns were going to go down, our farm income was going to down,” said Masters. ” All the data’s not in yet but in talking to farm producers across south Georgia I kind of think that played out. In terms of our farm income in southwest Georgia we did see it decline in 2014.”

Masters said 2014 also saw many farmers shift the amount of acreage dedicated to each crop, with more farmers planting peanuts, which is a trend he sees continuing in 2015. Masters said that while peanut crop prices would have some effect he felt many farmers would continue to plant more peanuts, thanks to provisions in the 2014 farm bill which provides advantageous price loss coverage for peanut farming.

“As far as 2015, when all else fails plant peanuts,” said Masters. “Right now that seems to be the most attractive thing for farmers to plant. Last year we planted about 600,00 acres of peanuts. Given the price of alternatives, mainly corn and cotton and soybeans to some extent, I think farmers are going to plant upwards of 700,000 acres and a lot of that is going to be dependant on seed availability. It is by far the most attractive crop by far right now.”

While Masters shared concerns about crop farming, he did say that livestock farming continued to be strong throughout the state in 2014, something he expects to see continue in this year.

“The one thing that remained a very bright spot was animal agriculture, particularly cattle,” Masters said. “We saw record highs in 2014 for those producers. Those were even carried over into 2015. Overall it was a down year for agriculture, but we have to keep in mind that was relative to the record highs we saw in 2013. Animal agriculture still is remarkably strong.”