It’s not happening at the speed of sound but, as far as the regional economy goes, the good news keeps getting better, Armstrong Atlantic State University economist Michael Toma said in releasing the university’s latest Coastal Empire Economic Monitor.
After an upbeat third quarter, the Savannah area economy continued to grow in the final quarter of 2012, according to Toma, director of Armstrong’s Center for Regional Analysis and the school’s Fuller E. Callaway professorial chair.
“The tourism industry was responsible for much of the upward lift in the economy,” Toma said, adding that continued jobs growth, record tourism and a strengthening housing market powered the economy as the year closed.
“This is further evidence that our regional economy enjoys an enviable foundation in the form of a well diversified structure that affords insulation against weakness in any given sector.”
Updated job growth data just released by the Georgia Department of Labor highlighted an issue that has long concerned Toma — the underreporting of manufacturing jobs.
“The performance of the regional manufacturing sector during the recovery has been exceptional,” he said. “Hopefully, now, after two significant upward revisions in the manufacturing employment data provided by the state, the reported data finally reflects reality and what leaders from our regional manufacturing sector have been telling us for years — that, yes, they are hiring and ahead of their stated goals.”
Toma said it was disappointing that the labor department could underestimate the Savannah area employment base by as much as 6,000 to 7,000 workers per month.
“It reflects a deficiency in the formula they use to extrapolate data from the small survey sample of employers to be representative of all employers in the region,” he said.
“We can only hope this experience will encourage a review and adjustment of the formula that yields data upon which we all rely to paint an accurate picture of the economy.”
Cliff more of speed bump
Despite the looming threat of the “fiscal cliff” that dominated the end of 2012, consumer confidence was stronger, which also resulted in better gains in the economy, he said.
“Overall, the Coastal Empire economic index capped off the end of last year with fourth-quarter improvements, and the region is poised to see this continued upswing in economic activity in 2013,” Toma said.
Among the quarter’s highlights:
• The coincident economic index, which measures the current heartbeat of the region, increased at a rate of 1.2 percent, bringing the total increases for 2012 to 2.2 percent.
• Tourism gave the index its biggest boost, buttressed by growth in employment, retail and electricity sales.
• Tourism tax revenue hit an all-time high in the last quarter of 2012. Hotel and motel tax receipts rose to a total of $1.3 million per month, a gain of 11 percent over the previous quarter and 14.3 percent over the last quarter of 2011.
• The fourth quarter gains offset flat performance by the ports, due primarily to cargo diversion as the potential for an East Coast dockworkers strike remained strong through the end of the year.
• The December jobs figure was the highest level of recorded employment in the last four years.
• The seasonally adjusted number of new residential home permits closed the year 40 percent higher than the data from one year ago.
• For all of 2012, housing permits were the highest they have been in the area since 2008 and 21 percent higher than 2011.
Looking ahead
While the Coastal Empire coincident index experienced steady gains, the leading index — which offers a short-term forecast of the region’s economic activity for the next six to nine months — also continued its rise, which bodes well for the first three quarters of 2013, Toma said.
“Looking at the big picture, the process of healing continues, with an economy that had been limping along now picking up the pace,” he said, adding that the Fed is unlikely to tighten its monetary policy until unemployment drops to around 6.5 percent.
As for sequestration, Toma said he expects the “vastly hyped rhetoric” about its impacts to prove just that.
“In fact, projected actual budget cuts amount to a roughly 1 percent reduction in federal governmental spending.”
ABOUT THE MONITOR
The Coastal Empire Economic Monitor presents quarterly economic trends and short-term economic forecasts for Savannah’s Metropolitan Statistical Area, which includes Chatham, Bryan and Effingham counties.
The quarterly report measures the heartbeat of the local economy, based on the analysis of economic data from the U.S. Census Bureau, the U.S. Department of Labor’s Bureau of Labor Statistics, the city of Savannah, Georgia Power and the three counties.
The report also presents a short-term forecast of the region’s economic activity in the next six to nine months and is available free by electronic mail. To subscribe, email CRA@armstrong.edu.
ABOUT CRA
The Armstrong Atlantic State University Center for Regional Analysis, housed in the university’s economics department, meets the applied research needs of Savannah’s business and community organizations. Areas of concentrated research include regional economic forecasting, economic impact analysis, economic development and business expansion, tourism development, survey-based research and specialty reports on topics of state, regional and local interest.