ATLANTA — Georgia’s economy will grow by 3 percent next year, according to a forecast the University of Georgia released Wednesday.
That’s better than the 2.3 percent growth the state will register for 2013 and better than the 2.3 percent rate the school predicts the national economy will expand next year.
“On balance, Georgia’s economy will outperform the nation’s economy in 2014, which is a very nice change from what we’ve experienced for quite some time,” said Charles Knapp, interim dean of UGA’s Terry College of Business that prepared the forecast. “Georgia got hit very hard by the Great Recession, and so far, it has recovered more slowly.”
The school figures the housing recovery, a resumed stream of folks moving to the state and enhanced economic development incentives are the reasons Georgia’s growth will outpace the nation.
“The main headwind, however, is federal defense fiscal austerity, especially cuts in defense spending,” the economists wrote.
Gov. Nathan Deal, who spoke at the annual luncheon when the forecast was released, told reporters the federal government is to blame for Georgia’s growth being less than it could be.
“I truly believe that most of the blanket that has been on our economy as a state, as well as the country as a whole, has been the uncertainty that lingers out there at the federal level,” he said. “It’s not something states can remove.”
The budget deal congressional leaders announced this week will help, he said, but he warned that health reform continues to provide uncertainty because of its rocky implementation and deadline extensions.
Even when businesses are growing, they’re likely to add fewer jobs than in past recoveries, according to John Silvia, chief economist for Wells Fargo.
“This is a significant challenge for our society,” he said. “We just have to recognize it’s a different world than 10 or 20 years ago.”
At the rate Georgia manufacturers are hiring, it will take 50 years to regain all of the factory jobs lost in the Great Recession.
Instead, employers of all segments will be adding 1.8 percent more jobs as the state’s overall economy is growing at almost twice that rate, according to UGA’s forecast.
Because that growth will be spread across multiple segments, the state is less vulnerable to recession triggered by one or two sectors, as was the case in the last recession, according to Knapp.
The only Peach State sector shedding jobs next year will be government, he said. Construction will add the most.
A hiring rate of 1.8 percent won’t shrink the unemployment rate much. The forecast only calls for it to drop next year from 8.5 percent to 8.0.