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Area economy back on the fast track
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Economist Michael Toma shard positive news with Effingham Chamber of Commerce community retreat attendees. - photo by Photo by Pat Donahue

ST. SIMONS ISLAND — As director of Armstrong State University’s Center for Regional Analysis, Michael Toma has been a bearer of grim economic tidings over the last several years. But Thursday morning, his remarks on the region’s outlook appeared to be much more well-received.

Toma, the Fuller E. Callaway professor of economics at ASU, told Effingham Chamber of Commerce community retreat attendees that the economy is on an upswing and is headed for more growth.

“We’ve had two consecutive quarters of exceptionally strong economic growth,” he said. “The current economy is really surging along for the first two quarters. Our current economy accelerated rapidly over the first six months of the year.”

In the first quarter, the economy grew 4-5 percent and reached an annualized 8 percent growth in the second quarter. Toma, who publishes an economic outlook each quarter, said it’s the best consecutive reports he’s issued in nearly eight years.

“This really is outstanding,” he said, “in terms of what’s happened the last two quarters. It’s significantly different from what we’ve seen the last two to three years.”

The Coastal Georgia economy hit its nadir in 2009-10 and has been trending upward since, according to Toma. Employment growth, consumer confidence and tourism sales are all up in the area. The bed tax as he calls it, the tax on hotel-motel rooms, is well above the figure it reached before the last recession. Savannah and Chatham County are receiving $1.4 million per month in bed tax receipts.

Toma also noted the Georgia Ports Authority’s recent record volume at the Savannah port as another indicator the local economy is thriving, and he said consumer confidence appears to be back.

“If people are not confident, they are not going to engage in those expenditures,” he said. “Happy consumers are spending consumers.”

Employment levels in the Bryan, Chatham and Effingham counties’ area has surpassed the peak of approximately 163,000 jobs prior to the recession. The area lost between 13,000 and 14,000 jobs during the downturn.

“Over the last five years, we have recovered,” Toma said. “It’s taken a while to get back to where we were. But now we have exceeded that level of employment.”

The local economy also has re-balanced itself over the last several years, Toma pointed out. The manufacturing sector is up about 2,000 jobs from its low point, while health and education are up about 2,000 jobs during the same period, and the leisure and hospitality industries are up more than 2,600 jobs.

“Those are big chunks of employment,” he said, adding that health and education and leisure and hospitality now employ more people than government in the three-county area “for the first time in forever. Those two sectors have now passed the government sector.”

Employment in retail trades is up a little bit while government jobs have been stagnant, according to Toma. The construction industry took the biggest hit during the downturn and it has been the slowest to recover. More than 4,800 construction jobs were lost as a result of the recession, but those losses are being offset by gains in other areas.

“That was a severe contraction,” he said. “But we are effectively replacing those jobs with jobs in manufacturing, education and health care, leisure and hospitality. Those are typically good-paying jobs in manufacturing and in education and health care.”

The private sector also has rebounded strong, Toma said, and it is creating the bulk of the job opportunities, leading to about 15,000 jobs created since the recession’s low point.

“The private sector is pulling our economy along,” he said. “It’s a significant recovery on the private side of the economy.”

Initial claims for unemployment insurance, once more than 2,000 in 2009, have been trending downward, falling to less than 1,000. Initial unemployment claims are now about 800 per month for the area. In 2010, the unemployment rate was 9.1 percent and has fallen to as low as 6.6 percent this year.

“Our labor market is slowly healing,” Toma said. “Healing is happening on the labor market.”

Weekly wages in the metropolitan statistical area are up 1.5 percent over the last year. Population growth was bad in 2010, but it too has bounced back. The employment levels of Effingham residents also are increasing, and the housing market is coming back in terms of building permits and price points.

“Things are improving in general in the Savannah metro area and in Effingham County,” he said.