Georgia’s Business Climate Tops in the Nation
ATLANTA – Georgia’s business climate has been ranked No. 1 in the nation for the sixth consecutive year by Site Selection, a leading economic development trade publication, according to Gov. Nathan Deal. According to Site Selection, Georgia is the first state to hold this ranking for six consecutive years under leadership by the same governor.
‘For six years now, Georgia’s business climate has been ranked No. 1 in the nation, as people from all over the country have come to our communities to find opportunity, jobs, hope and prosperity,’ said Deal. ‘Earning this distinction six consecutive times speaks to the immense strength of our business-friendly environment and the value of the strategic investments we’ve made across our state. Today’s announcement is the result of exceptional collaboration between public and private sector partners who create economic opportunities in Georgia’s communities, as well as conservative policies that attract more and more business to our state each year. I appreciate Site Selection once again recognizing Georgia with this honor and we are proud of the foundation that we have built and maintained for over half a decade.
‘Here in Georgia, we have truly cultivated an economic environment that rewards hard work and innovation, generates investments in local communities and improves the overall quality of life for families. We have not been content to rest on our laurels, as we’ve cut taxes and made even deeper investments in our workforce since first earning this distinction. We are proud to be the No. 1 state for business and as we look to the future, Georgia will continue to take the steps necessary to attract industry leaders from around the world and help homegrown small businesses succeed. It has been the honor of a lifetime to serve Georgia as governor as we’ve led the nation in economic development and I look forward to Georgia retaining its position as an exceptional place to do business, work, learn, and call home for many years to come.’
Each November, Site Selection releases rankings for the top states in which to do business. Site Selection’s business climate rankings are based on a survey of corporate real estate executives and site consultants and an index consisting of tax burden criteria from the Tax Foundation and KPMG’s Location Matters analysis and qualifying projects resident in the Conway Projects Database, which tracks new and expanded business facility activity worldwide. Georgia has been ranked among the top 10 states throughout the last decade and has held the top spot for the last five years.
‘A six-year top business climate winning streak is highly unusual,’ said Mark Arend, editor-in-chief of Site Selection. ‘But it stands to reason, given Governor Deal’s commitment to making Georgia a competitive location for business early in his administration and every year since. Capital investors tell us the state delivers the fiscal soundness, logistics infrastructure, competitive business costs and workers they require today and in the future.’
Deal was joined at the news conference by Arend, Georgia Department of Economic Development (GDEcD) Commissioner Pat Wilson, and former GDEcD Commissioners Attorney General Chris Carr and Chris Cummiskey.
‘Being recognized by Site Selection magazine for having the best business climate in the nation for the last six years is a testament to the leadership of Governor Deal and the General Assembly, and will certainly be among the many accomplishments remembered by Georgians of this administration,’ said Wilson. ‘The last eight years have been unprecedented for our state in terms of economic development from job creation to located projects and investment. We celebrate this accolade with all of our economic development partners across the state who have played an important role in helping Georgia earn and maintain this ranking.’
Economic development highlights:
- In the past eight years, Georgia has seen the creation of roughly 750,000 new, private sector jobs.
- At 3.7 percent, Georgia’s unemployment rate is now at its lowest point since 2001.
- In October 2018 alone, Deal and GDEcD announced the creation of more than 2,500 jobs and over $215 million of private sector investment in Cobb, Emanuel, Fulton, Hall and Troup counties.
- Since 2011, GDEcD has worked on more than 2,900 economic development locations and helped to bring roughly 214,000 jobs and $39.6 billion in investment to Georgia communities.
- GDEcD’s Global Commerce Division helped to bring in $5.56 billion in new investments for Georgia during the last fiscal year.
- Since 2010, overall exports from Georgia have increased by 28.8 percent.
- Since 2012, 74 percent of GDEcD location projects were outside of the metro Atlanta area.
- When state tax cuts passed earlier this year are fully implemented, Georgia’s corporate and individual income tax rates will be reduced from 6 percent to 5.5 percent. State tax reforms will also double the standard deduction for hardworking individuals and families from $3,000 to $6,000.
- As a result of federal and state tax reforms, Georgians could save up to $5 billion over the next five years. These reforms are together estimated to lead to a $4,200 increase in wage and salary income for the average household.
- The percent of Georgia’s population living below the poverty line has decreased by 2.1 percent since January 2017 and is at its lowest point since 2006.
- Monthly initial claims for unemployment insurance in Georgia recently fell to their lowest level since 1974.
- Georgia has maintained a AAA bond rating for 21 consecutive years.
- The state’s Rainy Day Fund, which was once almost empty, has now topped $2.5 billion, ranking it the highest in the Southeast and one of the top ten highest in the nation.
About Site Selection
Site Selection, published by Conway Data Inc., delivers expansion planning information to 48,000 executives of fast-growing firms. The senior publication in the development field, Site Selection is also available via Site Selection Online. The publication also publishes or co-publishes e-newsletters, including The Site Selection Dispatch, Life Sciences Report, Aerospace Report and Energy Report, Site Selection International, The FDI Report, TrustBelt.com and the OnSITE Travel blog
Economic Forecast: Midterm Results Should Ease Corporate Anxiety
Midterm Results Should Ease Corporate Anxiety; Fed to Hike Rates Once in 2019
ATLANTA–The upcoming split control of Congress should somewhat assuage nervousness in the business sector, according to Rajeev Dhawan of the Economic Forecasting Center at Georgia State University’s J. Mack Robinson College of Business.
“Political gridlock is usually tolerated by businesses, and they aren’t expecting rollbacks of the 2017 tax cuts or imposition of new taxes or regulations in the near future,” Dhawan wrote in his “Forecast of the Nation,” released Wednesday, Nov.14.
With midterm elections over, Dhawan anticipates business investment should recover, but the rebound will be muted and affect the future pace of monthly job additions.
“Fall is usually prime time for corporate boards to plan new capital outlays. But sharp ups and downs in stock indices over the past few months will not be conducive to capital expenditures,” Dhawan said. “The damage to CEO confidence is evident in reduced bank loan growth and nonexistent third-quarter investment growth.”
The forecaster said the stock market losses of the last three months also will affect future consumer spending through psychological impacts of lower 401(k) balances.
Despite potential public pressure from the White House, Dhawan expects the Federal Reserve to hike rates in December, then hold firm.
“Money that fled the stock market over the past few months stayed on the sidelines in cash due to political uncertainty,” Dhawan said. “Because it didn’t come to the bond market, the spread between the two-year bond rate and the 10-year bond rate dropped from 60 points in January to only 30 basis points by early November.”
As a result of the tight spread, the Fed must wait until June 2019 to raise rates following the December hike or risk an inverted yield curve, which typically signals a recession.
Dhawan pointed out two factors that could put upward pressure on Treasury yields: the rising fiscal deficit and tax amnesty for repatriating dollars held abroad by corporations.
“I expect the 10-year bond to rise just 70 basis points from today’s levels, which indicates two more hikes,” Dhawan said. “After the December 2018 hike, that leaves one hike in June 2019. By mid-2020 we will start to get below the Fed’s 2.0 percent gross domestic product (GDP) growth rate estimate. That’s why I have rate cuts in 2020, not hikes.”
Highlights from the Economic Forecasting Center’s National Report
- Following strong GDP growth of 3.5 percent in the third quarter of 2018, the fourth quarter also will be above par at 2.9 GDP growth will moderate to below 2.5 percent by late 2019. After expanding at 2.9 percent in 2018, the economy will grow 2.7 percent in 2019 and 1.8 percent in 2020.
- Investment growth will be 6.8 percent in 2018, moderate to 5.1 percent in 2019 and to 3.5 percent in 2020. Jobs will grow at a monthly rate of 209,000 in 2018, 146,600 in 2019 and 100,400 in 2020.
- Housing starts will average 1.262 million units in 2018, fall to 1.259 in 2019 and remain around 1.257 in 2020. Expect auto sales of 17.0 million units in 2018, 16.3 in 2019 and 15.6 in 2020.
- The 10-year bond rate will average 3.0 percent in 2018, 3.7 percent in 2019 and 3.6 percent in 2020 following Fed rate cuts.
Corporate Sector Bounce-Back Leads Georgia Job Growth
ATLANTA–Georgia’s job additions in the third quarter nearly equaled the entire job additions in the first half of 2018, according to Rajeev Dhawan of the Economic Forecasting Center at Georgia State University’s J. Mack Robinson College of Business.
“In the first six months of 2018, the Peach State saw job gains of 35,600, just slightly above the same period last year,” Dhawan wrote in his quarterly “Forecast of Georgia and Atlanta” released Wednesday, Nov. 14. “However, in the third quarter alone, employment increased by 35,900 jobs due to the return of corporate job creation.”
In the first half of 2018, job creation in high-paying sectors, such as corporate, wholesale, transportation and information, moderated sharply and posted a decline of 2,300 jobs. This was in stark contrast to strong job creation in domestic demand-driven sectors, such as retail trade and hospitality (among others), which gained 38,000 jobs.
High-paying jobs, especially in corporate and information, came roaring back in the third quarter. Dhawan indicated that nearly one-third of jobs added in the third quarter were corporate, driven by a rebound in support and administrative positions which compose 50 percent of jobs in the sector.
“Georgia’s fall in corporate job additions in the first half of 2018 and subsequent third-quarter recovery was not seen nationally or in neighboring states. This makes us suspect an anomaly in employment data which sometimes happens since these numbers are based on a statistical inference of a sample,” Dhawan said. “We confirmed our suspicion by checking state revenue data which showed no evidence of high paying job losses. Thus, the underlying trend of the economy is healthy.”
Closely linked to the corporate sector, the information sector experienced a first half decrease in jobs, followed by a sharp rebound in the third quarter. The healthcare sector also saw good gains.
Dhawan cited healthcare facility expansions for Children’s Healthcare of Atlanta in Druid Hills and Piedmont Hospital’s heart and vascular center in the metro area as examples. Facility expansions elsewhere in the state include Southeast Georgia Health System in Brunswick, Habersham Medical Center in north Georgia and Tanner Health System in south Georgia.
These projects and the rebound of multifamily housing permits have led to a substantial gain in construction jobs statewide. Strong sales and property tax collections have also resulted in city and county-level job gains in the government sector.
Despite these positive trends, Dhawan does not expect job growth to continue at this pace for Georgia.
“The job creation bump in the third quarter was a rebound from job losses in the first half of the year,” Dhawan wrote. “Therefore, we expect job creation going forward to revert back to its long-term moderation trend as the business cycle is maturing, evident also in the moderating business investment growth at the national level.”
The forecaster said the third quarter was not all good news for Georgia. Hurricane Michael’s damage to south Georgia cotton, pecan and peanut crops was an estimated $1.2 billion, with another $1 billion in destroyed timber resources.
Highlights from the Economic Forecasting Center’s Report for Georgia and Atlanta
- Georgia employment will add 90,600 jobs (15,000 premium jobs) in 2018, 68,900 jobs (13,900 premium) in 2019 and 55,500 (11,500 premium) in 2020.
- Nominal personal income will increase 4.1 percent in 2018, 4.7 percent in 2019 and 5.0 percent in 2020.
- Atlanta will add 63,000 jobs (10,800 premium jobs) in 2018, 46,900 jobs (9,600 premium) in 2019 and 38,100 jobs (8,700 premium) in 2020.
- Atlanta housing permitting activity in 2018 will increase 10.8 percent, fall 3.8 percent in 2019 and increase 0.4 percent in 2020.
Flattening Yield Curve Signals Single Remaining Rate Hike in 2018
ATLANTA–Expect the Federal Reserve to raise interest rates in September, then hold firm until long-term interest rates inch up, Rajeev Dhawan of the Economic Forecasting Center at Georgia State University’s J. Mack Robinson College of Business says.
“In his July testimony, Fed Chairman Jay Powell pretty much sealed September’s rate hike,” Dhawan wrote in his ‘Forecast of the Nation,’ released Wednesday, Aug. 29,. “The only justification for delay would be a calamitous drop in financial markets in the next 30 days.”
Foreign currency crises in Argentina and Turkey, as well as the weakening yuan (China), real (Brazil) and ruble (Russia), could raise caution at the Fed. Another cause for concern among economists and the financial press is the tightening U.S. yield curve, which shows interest rates for Treasurys with maturities from one to 30 years.
“Some flatness is to be expected as the Fed raises the short end of the yield curve,” Dhawan wrote. “The problem is the long end o has barely budged, even as the short end has risen by 100 basis points.”
Dhawan pointed to the 20-odd basis point spread between two-year and 10-year Treasurys as the reason for only one more rate hike in 2018. If the ongoing emerging market currency crisis intensifies further and affects U.S. financial markets, especially investors flocking to Treasurys for safety, it could wipe out the remaining spread and jeopardize the September rate hike.
“For future rate hikes, the Fed will wait for long bond yields to inch up,” Dhawan said. “When the Treasury Department goes to market to finance more debt, I anticipate the long bond yield will rise.”
Look for the Federal Reserve to take a pause from raising rates in December and restart in 2019, resuming their watchful course of raising rates, he said.
“The Fed always watches inflation, which measures the heat of the economy. But inflation is well within the target range of two percent and current economic growth is running at just about 3.0 percent,” Dhawan said. “To sustain this growth we will need to see the currently good investment numbers get even stronger, and investment will need to grow at a high double-digit clip, as it did in the late ’90s, for the U.S. economic supertanker to speed ahead at more than four percent growth.”
Intensifying trade spats with the nation’s major trading partners are creating uncertainty for future growth, he said.
“The first round effect of trade spats is postponement of domestic investment expenditures,” Dhawan said. “But the real damage occurs when retaliation by allies results in upheaval in the Treasury bond market. This does not appear likely yet, but the game is still young.”
Highlights from the Economic Forecasting Center’s National Report
- Following robust GDP growth of 4.1 percent in the second quarter of 2018, the economy will expand at 2.8 percent in 2018, 2.4 percent in 2019 and 2 percent in 2020.
- Business investment grew 7.3 percent in 2018’s second quarter. Expect growth to finish at 7.4 percent in 2018, 5.8 percent in 2019 and 4.9 percent in 2020. Jobs will grow by a monthly rate of 205,000 in 2018, 142,600 in 2019 and 125,700 in 2020.
- Housing starts will average 1.283 million units in 2018, fall slightly to 1.258 in 2019 and rise to 1.300 in 2020. Expect auto sales of 16.8 million units in 2018, 16 million in 2019 and 15.8 in 2020.
- The 10-year bond rate will average 3.1 percent in 2018, 3.9 percent in 2019 and 4 percent in 2020.
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Domestic-Demand Sectors Drive Georgia Job Growth
ATLANTA–Georgia’s job creation in the first six months of 2018 primarily arose from domestically driven sectors, according to Rajeev Dhawan of the Economic Forecasting Center at Georgia State University’s J. Mack Robinson College of Business.
The state created 36,300 jobs in the first half of the year, lower than the last half of 2017 and opposite the U.S. trend of slight acceleration in job growth.
“In the first half of 2018, domestically driven sectors, chiefly hospitality, education, healthcare, construction and retail trade, created 40,000 jobs,” Dhawan wrote in his quarterly “Forecast of Georgia and Atlanta” released Wednesday, Aug. 29. “Meanwhile, globally connected sectors (such as manufacturing, corporate, information and transportation) lost 3,700 jobs.”
Trade uncertainty and a strong dollar resulted in weaker job growth in manufacturing, but the primary cause of the deviation from the national trend was a drop in corporate employment.
“Surprisingly, corporate sector employment dropped by 6,000 positions in the first half of 2018,” Dhawan wrote. “These two Peach State trends, weak gains in manufacturing and job losses in the corporate sector, are not evident in national figures.”
Despite the recent lack of job growth in the large corporate sector, job losses from this sector have not spilled over into the rest of the economy. As evidence, Dhawan points to his triangle of money concept, which looks at tax collections to form a complete picture of job quality and purchasing power.
“Georgia’s state tax revenues, such as gross sales receipts, are not showing any weakness,” Dhawan says. “Thus, the moderation in the corporate sector job growth is likely an aberration in the data and will get sorted out in next year’s benchmarking release.”
Corporate expansions in Atlanta, Brunswick, Demorest and Carrolton, along with decisions by healthcare technology companies to locate in Atlanta, are leading to job growth in healthcare and construction, buoying overall job growth and reflecting an underlying growth trend.
Medium- and small-sized businesses also are trending positively.
“The news of expansion and headquarter relocations, especially for medium-sized firms, is reassuring,” Dhawan said. “Due to steadily climbing consumer confidence, the prognosis also is good for small businesses that mostly depend on domestic demand.
Domestic demand also has positively affected the hospitality sector, which experienced strong gains in the first half of 2018 through a 20 percent increase in rooms booked over the last six months of 2017.
Dhawan anticipates the negatives of global pressures on catalyst sectors will be offset in 2018 by the positives of recent tax cuts and rising confidence among consumers and small businesses, driving domestic demand sectors and resulting in a continuation of 2017’s job growth trend.
Highlights from the Economic Forecasting Center’s Report for Georgia and Atlanta
- Georgia will add 78,400 jobs (12,500 premium jobs) in 2018, 61,700 jobs (11,800 premium) in 2019 and 54,800 (10,800 premium) in 2020.
- Nominal personal income will rise 4.4 percent in 2018, 5.2 percent in 2019 and 5.2 percent in 2020.
- Atlanta will add 53,600 jobs (9,400 premium jobs) in 2018, 42,900 jobs (9,100 premium) in 2019 and 39,500 jobs (8,400 premium) in 2020.
- Atlanta permitting activity in 2018 will rise 11.7 percent, fall 1.3 percent in 2019 and rise 0.7 percent in 2020.