ATLANTA — The metro Savannah economy will grow better than the state this year, according to Georgia State University’s quarterly economic forecast released Wednesday.
“Going forward, we expect job growth to continue in Savannah,” wrote Rajeev Dhawan, director of Georgia State’s Economic Forecasting Center. “Our forecast calls for a very strong 2.3 percent job gain in 2013, followed by a solid 2.9 percent in 2014.”
Savannah added 1,400 jobs in the first three months of the year, spread across all sectors but with the biggest gains coming from leisure/hospitality and retailing. That was enough to drop the unemployment rate from 8.6 percent to 7.8.
Statewide, economic recovery is well entrenched in Georgia, but that doesn’t mean it isn’t being dragged down by external circumstances. The state will expand employment by 1.8 percent this year, further reducing its unemployment rate to 8.6 percent.
Personal income will grow by 2.5 percent in 2013, but it won’t do much to boost disposable income after inflation and the resumption of the full, federal employment tax.
Add to that the fact that one-third of Georgia homeowners no longer can tap home equity to supplement their cash flow because they owe more on their mortgage than their home is worth, and the result is tepid consumer spending despite pent-up demand.
“The battle will be fought between the urge to splurge on one side and reduced disposable income on the other,” said Dhawan. “We already can guess the odds of winning here.”
Stingy consumers mean meager sales-tax collections, both for the state and local governments as well as for transportation projects in 46 counties, including those in the Augusta, Columbus and Vidalia regions. That could hobble government budgets.
For example, the forecast notes that Georgia’s statewide sales-tax collections grew by a modest 0.4 percent from July to April.
“That’s a far cry from the 5.3 percent growth we had in fiscal 2012,” Dhawan said.
What are the external circumstances buffeting the Georgia economy?
Europe’s recessionary economy, the pause in China’s growth, Middle East instability and the developing impact of the sequestration of federal funds are counterweights to the surging stock market and rising home values.
The 2013 forecast predicts the sectors benefiting will be wood products and transportation equipment in manufacturing, and the administration/support, information and leisure/hospitality service areas. Cutting jobs will be the federal government, textile mills and mining, according to the forecast.
The most vibrant metro areas will be Atlanta, Savannah and Athens which will beat the state’s pace while Augusta, Columbus, Dalton and Albany will be treating water.
