The Savannah metro-area economy should experience “well above average” growth this year, economist Michael Toma told more than 500 people Wednesday at the Savannah Chamber’s annual economic outlook luncheon at the Savannah International Trade and Convention Center.
“The past 18 months have seen substantial growth in the regional economy that is expected to continue through 2015,” he said. “This year, strength in tourism, port activity and business services, along with increasing strength in manufacturing and the housing market, should set the stage for above-average employment and economic growth,” he said.
Toma, the director of the Center for Regional Analysis at Armstrong State University, joined Ben Ayres, dean of the Terry College of Business at the University of Georgia, to present the regional, state and national economic outlook for the year.
The state forecast was also positive, with Terry College predicting Georgia’s gross domestic product will grow by an inflation-adjusted 3.3 percent, Ayres said, adding that the state should replace all jobs lost to the recession by the middle of the year.
Savannah’s economy expanded rapidly through the first half of 2014, then settled into a more sustainable pace in the second half, Toma said.
“Last year was OK, but what we’re seeing now that we hadn’t seen before is our economic engine starting to fire on all pistons,” he said, adding that those pistons include employment, tourism, retail sales, consumer confidence, port activity and electrical sales as they relate to manufacturing.
“We’ve seen strength in various sectors as we continued to pull out of the recession, but now we’re seeing it across the spectrum, which is adding to the richness and diversity of our metro area economy.”
•Employment: Since early 2010, at the low point of the recession, we have added approximately 18,000 jobs to the three-county metro area of Chatham, Effingham and Bryan, Toma said.
“We’re well beyond where we were before the recession hit. And it has been a private-sector-driven growth. Two of Savannah’s industries — leisure/hospitality and education/health services have grown to surpass total public sector employment as the largest sectors of the regional economy,” he said.
Also notable, Toma said, is the 3.8-percent increase — more than 200 jobs — in the construction sector.
•Tourism: The tourism and hospitality industry continues to contribute to economic growth, Toma said. Through late 2014, boardings at the airport are 10 percent ahead of last year’s pace. Hotel room tax receipts are up 13 percent, projected to exceed $20 million for 2014. Hotel occupancy rates are up from 68 percent to 71 percent, and the sector provides employment for more than 24,600 people.
•Manufacturing: Savannah’s “showcase” continued to show strength in 2014 and is poised for more growth this year, Toma said. Gulfstream now employs more than 10,000. JCB has added a new line of backhoe loaders, which will swell its employment ranks from 500 to 600; and Mitsubishi merged with Hitachi to form Mitsubishi Hitachi Power Systems Americas at the Pooler megasite and is on track to employ 500 by the end of next year.
•Ports: Georgia Ports Authority experienced record growth in 2014, moving more than 3 million 20-foot containers.
“The big news for the ports, of course, was the signing of the Project Partnership Agreement that gave the green light to construction on the port’s $700 million harbor expansion project. The GPA board also approved a new $10 million gate at Garden City Terminal, paving the way for a capacity increase from the current 4.5 million containers to 6.5 million boxes.
•Other drivers: The regional health care sector added 200 workers in 2014, now employing 10 percent more workers than at the peak of the last cycle, Toma said. In addition, the market for residential real estate improved considerably, with 4,000 home sales projected for Chatham County in 2014, a 14 percent increase.
Vacancy rates in the metro Savannah office market have decreased, commercial development activity is strong and the industrial market vacancy rate has dropped to 8 percent from almost 20 percent in 2010.
State also on the mend
The Terry College baseline forecast for the state calls for Georgia’s inflation-adjusted Gross domestic product to increase by 3.3 percent, which exceeds the 2.3 percent growth estimated for 2014 and is higher than the 2.8 percent rate estimated for the U.S., according to Ayres.
“This positive differential reflects projects in the economic development pipeline, strategic shifts in the state’s economic development strategy, leverage from the housing recovery and slightly more supportive demographic forces,” he said, adding that the state’s nominal personal income is expected to grow by 5.4 percent, which is higher than the 4.7 percent gain expected for the nation. The state’s employment also is expected to grow by 2.3 percent, faster than the predicted 1.8 percent growth nationally.
If that happens, Georgia will replace all the jobs lost to the recession by mid-2015, he said.
The main headwind facing Georgia in 2015 is federal fiscal austerity, he said, especially cuts in federal defense spending and potential changes in fiscal policy.
Georgia’s military-based communities are extremely dependent on federal spending – nearly twice the U.S. average,” Ayres said. “And, because Georgians carry more debt and have relatively less in savings than the average U.S. household, the state is more vulnerable to pronounced shifts in Federal Reserve policy.”
Overall, Ayres’ forecast for the state was positive.
“I’m happy to report that, for the first time since the Great Recession, the Terry College forecasts a growth rate for the state in 2015 that will exceed our long-range average growth rate,” he said.
“The state of Georgia will outperform the average state this year.”
Chamber chairman calls for joint police department
At the end of the Economic Outlook presentations, Savannah Chamber chairman Trey Cook told the audience his hope for 2015 was that city and county leaders put aside their differences and sit down to resolve the issues plaguing the joint police department.
“From the chamber’s perspective, one of the most threatening clouds on the horizon is our crime and public safety,” he said.
“Certainly, the police merger is complex, with many cost-and-control issues,” he said. “But we are too small a community for these two governments not to come together on something as important as our public safety.”
Cook implored Mayor Edna Jackson, County Commission Chairman Al Scott, the city and county managers and the city and county lawyers to sit down and come up with a plan for the Savannah-Chatham police department that will be amenable to all.
“Going backwards should not be an option,” he said. “We all want and deserve a safe community.”