Georgia has had a couple of positive reports come out that indicate the state is recovering from the recession and the outlook appears brighter. As someone who has often had to report negative news of budget cuts, lackluster revenues and growing needs, it is very encouraging to see some hope in the medium and long term.
Unemployment is down and Georgia is pro-business
The most heartening news is that Georgia’s unemployment rate for November dropped to 8.5 percent from 8.7 percent. This is the lowest unemployment rate in the state over the past four years. Although Georgia still lags the nation in unemployment, we are slowly narrowing that gap.
The second report comes out of Forbes Magazine, which recently ranked Georgia as the eighth-best state to do business. Last year, Georgia ranked 11th, so we have broken the top 10 in this list. Georgia was noted as an economic player with a state gross domestic product (GDP) of $419 billion and a five-year growth rate of -0.2 percent.
As you may know, there have been increasing fights over the role of unions in the workforce. Recently, Michigan adopted right-to-work provisions which allow employees to be employed even if they are not a union member. Georgia has had these provisions for so long that we often wonder why this is a big deal. Union workers in Georgia make up less than 5 percent of the workforce, the second-lowest in the country, and that was cited as strength of the state.
Indeed, the entire Southeast is now a destination for overseas car manufacturers because of the pro-business climate laws in place. In the detailed categories in the Forbes report, Georgia ranked No. 24 in business costs, No. 2 in regulatory climate, No. 40 in economic climate, No. 11 in growth prospects and No. 37 in quality of life. The state also ranked No. 6 in labor supply.
It is important to mention some of these latter indicators. Of course, businesses want lower taxes and lower regulatory states and Georgia has tried to make those areas attractive to investors. But businesses also want an educated workforce, a robust transportation infrastructure, and quality of life amenities like museums and arts.
As budget writers, we acknowledge that cuts will be required in the short term. But we need to balance these with the long-term impact if we cut investments in these areas that job creators look to. Indeed, Forbes was quick to point out that 19 percent of Georgians live below the poverty line. There is no easy solution but vigilance and balance in decision making will be important.
Economy and jobs outlook in Georgia
Finally, we look to the report of economists. On Nov. 14, the Georgia State Economic Forecasting Center (EFC) held a forum to publish the quarterly economic forecast for Atlanta and Georgia as a whole. Overall, Dr. Rajeev Dhawan, the director of EFC, continued an outlook of slow growth for 2013 around 1.1 percent.
Dr. Dhawan noted the growth drivers in the state will have to be domestic in nature considering the diminished outlook for Europe and China — making the federal fiscal cliff decisions, and the state’s continued struggle with housing recovery, key items of interest.
The state’s employment base grew by 32,500 in calendar year 2011, beginning our slow recovery. The expectation for 2012 is slightly higher around 51,000 with a similar outlook for 2013 around 55,000. While these are encouraging numbers, the rate of employment growth is not expected to keep pace with the population of job seekers, with unemployment likely around 8.2 percent into 2014.
Expectation of job growth for 2013 is highlighted by the number of anticipated premium jobs, nearly 9,800 of them, with additional premium jobs added in 2014’s outlook, when the employment base for the state is expected to hit the 4 million mark. Premium jobs are those that have an annual wage of $73,700 and fall into one of 13 sector categories.
Because these jobs entail more discretionary income (and indirectly income and sales tax revenue), these jobs are looked at having a “bigger bang for the buck” by economists.
Another area usually highlighted in Georgia’s economic outlook is the state’s busy ports. State exports have been a mixed bag as of late, showing continued growth, but the global slowdown during 2012 has seemingly halted any major gains. By world regions, the Asia-7, (Japan, Korea, Singapore, Taiwan, China, Hong Kong and Australia) are ranked No. 1, showing a 6.6 percent change in Georgia export receipts through the first 7 months of 2012 and demonstrate the state’s reliance on international growth.
Major purchases by the Asia-7 include aircraft, industrial machinery (including computers), and pulp and paper products, hinting at some of the sector gains the state has seen in these industries. Georgia’s single major trading partner continues to be Canada, who imported $3.8 billion in goods through July 2012; however, this was 1.5 percent less than the comparable time last year.
While the state relies on these exports, the top export category for the first seven months of 2012 is industrial machinery (including computers), which experienced significant growth of 16.3 percent from last year. Also of interest, exports of vehicles and electric machinery also have seen increases in 2012 of 3.8 percent and 2.3 percent, respectively.
Next week: Regional and sector job expectations
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