Georgia’s 2013 gains deceiving after fast start 2014 a ‘wait and see’ year



ATLANTA — Georgia took great steps toward economic recovery in 2013, but the state began to fade by September.

Now some of the enthusiasm has waned a bit, said Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University.

His forecast for Georgia in 2014 splits the difference, saying he is “guardedly optimistic” for the state economy.

The good news in Georgia is unemployment shrank one full point in 2013 and Georgia added 89,200 jobs. The jobs addition was a healthy 40 percent increase over 2012. The Atlanta region was again the big jobs generator, creating 60,500 (68 percent) jobs in the state.

Dhawan differentiates total jobs and “premium jobs.”

Premium jobs are higher paying and thus more likely to jump other industries such as home-buying, which has such a large ripple effect through its ancillary industries.

But employment and jobs creation were decelerating at the end of the year after a fast start in 2013. First, job growth in the state would have been “abysmal” except for gains in the retail and hospitality sectors, and those jobs are mostly lower-paying jobs and contribute little in overall economic growth.

Education and health care added only 4,000 jobs in the last half of 2013 after adding 11,000 jobs in the first half. Georgia’s corporate sector grew by 29,000 jobs for the year, but lost 4,000 in the last six months.

So while aggregate jobs numbers are up, they are somewhat deceiving.

Tax collections in Georgia also started fast, but then shrank back. Collections hit a high of 9.6 percent in the first half of 2013, but were an anemic 0.7 percent by the last quarter of the year.

On the bright side, manufacturing added jobs in the second half of the year, which erased its losses in that sector.

Dhawan credited that to cheap domestic energy prices along with steady demand from the automotive sector.

Nationally, new auto sales were excellent, selling numbers in 2007 territory, 15,000-plus.

Car sales are another favorite leading economic indicator of Dhawan’s, though they are less so when dealers are giving up to 97-month loans to move them, he said.

The tech sector took a hit after showing real signs of recovery.

After a steady drain in tech jobs going back to 2001, Georgia began an uptick in 2011 when it added 1,300 jobs and then leaped ahead with another 3,500 jobs in 2012.

But 2013 ended with a net loss of 1,200 jobs. That this high-paying catalyst sector failed to grow was disconcerting.

“These numbers are a big puzzle, and I hope that benchmark revisions in March will correct the anomaly,” Dhawan said.

There may be causes for the slowdown in the tech sector, such as a companion slowdown in the health care industry, a big user of technology products. Perhaps venture capital is going back to Simi Valley “looking for the next Facebook or Zynga” jackpot.

Dhawan still has faith in Georgia’s tech sector, predicting it to grow little in 2014 before “picking up steam in 2015 and 2016.”

Of Atlanta’s 57,000 new jobs predicted in 2014, almost 20 percent of them fell in the premium job range. Jobs are predicted to rise in the metro area to 69,800 by 2016 with a healthier 16,400 premium jobs (23.6 percent).

The stock market performed extremely well. Stocks were up 30 percent in value, which he laid at the feet of the Fed. It had its ear to the ground. When then-Fed chief Ben Bernanke began talking of “tapering off” influencing the interest rates by buying up treasury notes, he backed off reinvigorating confidence in the market.

“The Fed succeeded in reflating portfolios … [but] that gravy train is now over,” Dhawan said. “Pallid economic reports at home – the last two reports were anemic – and in China’s manufacturing sector have ignited a rout in stock markets worldwide.”

In 2014, there is not a lot the U.S. can do except “roll with the punches,” as China tries to right itself, he said.

Stock market volatility will be the rule not the exception in 2014, according to Dhawan.

“It will keep consumers more cautious than they have been. As a result, growth and investment from the corporate sector will moderate,” Dhawan said.

Georgia, like the rest of the country, will have to wait and see what the global economy, especially China, does in the coming year. If it begins to click enough to benefit the state’s Fortune 500 companies, better economic times could come into focus.

“That normalcy is still quite a while away,” he said.

BUS 03-19-14

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