NORTH ATLANTA METRO, Ga. — Economists admit the coronavirus recession took them by surprise.
“It’s not something economists could have easily predicted,” said Alexander Hill, a University of Georgia senior research analyst. “We had no idea it would have such a huge impact on the economy. We thought it would stay in China. We thought a vaccine would come out sooner.”
The original economic forecast saw solid growth for 2020, with jobs and the GDP expected to go up a few percentage points. Hill added the U.S. had great federal fiscal policies that kept interest rates low, and lending was still going well.
But the pandemic rewrote the script. U.S. Labor Department data shows the nation lost 22.2 million jobs. Approximately 42-percent of those jobs have been reinstated, according to a Pew Research Report. The Bureau of Labor Statistics reports 4 million of those positions have been eliminated.
Hill said the 2020 recession was very short – only six months. But the economic pain lingers.
“Even though the recession is technically over, a lot of people are not feeling that in their wallets and in their day-to-day lives,” Hill said.
Experts from UGA’s Selig Center for Economic Growth have unveiled their 2021 outlook for Georgia.
“The national economy is not going to recover as fast as Georgia,” Hill said. “We expect 1.5 percent job growth in Georgia from 2019 to 2021.”
Analysts also believe Metro Atlanta will do even better than that, with job growth expected to increase by 1.7-percent. Hill said economic recovery in North Fulton, Dekalb and Forsyth Counties will be driven by business development — attracting new corporations and expanding factories. The Atlanta area also specializes in industries that suffered the least in 2020: transportation, warehousing, logistics and wholesale trade.
Plus, there’s the benefit of a highly skilled and educated workforce.
“Another driving factor is innovation,” Hill said. “You see a lot of entrepreneurship … It’s a very important indicator for economic growth.”
A third highlight for north Atlanta Metro is population growth, which experts project will lead to a strong housing market in 2021.
“The housing market is a big foundation of the economy,” Hill said.
The report on Georgia’s 2021 economic outlook also comes with a few warnings, such as the risk of a double-dip recession if coronavirus cases continue to reach new highs.
“A double-dip recession would be caused by a combination of two things — another shutdown on the state level and no stimulus coming out at the federal level,” Hill said, adding that the likelihood of Georgia suffering that fate is low.
“We predict that Georgia will avoid it based on availability of the vaccine and the state’s business friendly environment. Governor Kemp also seems resistant to having another shutdown,” Hill said. “We want to keep businesses going, even if that includes implementing more safety regulations, like requiring more mask use.”
The economy was the top issue for registered voters in 2020, with 79-percent telling the Pew Research Center they considered it very important. From a political standpoint, Hill said economic indicators, like the stock market, are having a positive response to President-Elect Joe Biden.
“The forces at work are favoring a Biden presidency and are optimistic that the pandemic will kind of be over in large part by mid-2021, or late 2021, when we have enough people wearing masks or at least becoming vaccinated,” Hill said.
On a specific level, economists believe Georgians should brace for changes and a slow recovery for 2021 and 2022 in several key areas:
Cost of living: “Because of our nation’s fiscal policy, it will slightly increase inflation, and the cost of living will go up in the short term,” Hill said, noting that includes housing prices.
Jobs: Hill said the job market will definitely be up, “but, it will take time to get back to where we were pre-pandemic.” With no other economic risk factors expected, hiring could reach 2019 levels by mid-to-late 2021.
Income: The raw numbers might go up with companies becoming optimistic about hiring and raises, Hill said. Corporate profits will also be up. But the long-term trend of wage stagnation will not keep up with the cost of living.
Cost of healthcare: “Unfortunately, it’s going up,” Hill said. “Hospitals suffered major financial losses this year. Their profits don’t really come from people coming into the emergency room with COVID-19. They come from people having surgeries and treatments and preventative care,” Hill said. “The insurance companies have shown that they are very willing to put the price increases on the consumer instead of shouldering it themselves.”
Consumer spending and confidence: “People are seeing the news about the vaccine, and consumers are ready to get back out there and spend money, travel, and whatever they would normally be doing if there wasn’t a pandemic,” Hill said.
Brick-and-mortar stores: “The one aspect of our economy that likely will not go back to the level it was, is the existence of brick-and-mortar retail,” Hill said. The pandemic recession expedited the trending shift toward online shopping.
Restaurants, tourism and business travel: Dining in restaurants and vacations are expected to return to 2019 levels, but that could take until the end of 2022. Hill said business travel could also return to normal by 2022, but not by the end of 2021.