ATLANTA -Fourth quarter job gains in Georgia proved resilient in the face of global turmoil, and domestic demand will continue to buoy job growth in the Peach State, according to Rajeev Dhawan of the Economic Forecasting Center at Georgia State University’s J. Mack Robinson College of Business.
Dhawan pointed to 2015 growth in four key sectors in his quarterly “Forecast of Georgia and Atlanta,” released Feb. 24, 2016. “Despite global headwinds, healthy domestic consumption is advancing employment in sectors such as trade, hospitality, education and healthcare, and government.”
These domestically-centered sectors, especially education and healthcare and government, can expect growth but at a slightly slower pace than 2015.
Despite an exceptional fourth quarter in which Georgia added more jobs (48,400) than the previous nine months combined (47,900), the state added only 96,300 jobs for 2015 – a steep drop from the 145,000 jobs added in 2014.
Job growth in manufacturing, a catalyst sector, was less than half than the 11,200 jobs added in 2014. “This slowdown was expected as a high dollar pushed prices up for international purchases,” Dhawan wrote. “Despite the headwinds, this sector is expected to eke out about 3,000 jobs in 2016.”
However, strong domestic consumption is expected to boost manufacturing job growth in certain metropolitan statistical areas (MSAs) where goods are produced to be sold in the country. Columbus, whose auto parts suppliers benefit from their proximity to the Kia plant in Troup County, is expected to see job growth of 1.7%. Dalton, where manufacturers produce carpeting and other inputs for residential and commercial properties, is expected to see manufacturing job growth of 2.0%.
The falling price of oil is proving to be a tailwind for metro Atlanta, unlike other cities around the country.
“We never had shale oil to begin with, so we are avoiding the bust being felt in Houston,” Dhawan said. “In the Atlanta metro area, construction is going strong since investment that was likely earmarked for oil investment is making its way into commercial and hotel investment due to low oil prices.”
As a result, new office towers are being proposed across Metro Atlanta. Perimeter Mall and Sandy Springs are anticipating large mixed-use buildings. Additionally, hotels are being planned near the future Braves stadium in Cobb County, the airport and a convention center in Alpharetta.
Residential construction in Atlanta also is booming with a 12.5% increase in housing permits in 2015 and an expected increase of 5.3% in 2016. Dhawan said that job creation in 2016 will support this permit growth. “Through much of the forecast period, global malaise will hinder job advancement, but expect domestic demand to give it all she’s got.”
Highlights from the Economic Forecasting Center’s Report for Georgia and Atlanta
- Georgia employment will gain 76,000 jobs (13,500 premium jobs) in calendar year 2016, 75,800 jobs (13,100 premium) in 2017 and 72,600 (12,300 premium) in 2018.
- Nominal personal income will increase 5.0% in 2016 and 5.6% in 2017 and 2018.
- Atlanta will add 54,500 jobs (10,000 premium jobs) in calendar year 2016, 52,100 jobs (9,300 premium) in 2017 and 52,000 jobs (9,000 premium) in 2018.
- Atlanta permitting activity in 2016 will increase 5.3%, grow 3.9% in 2017 and 2.2% in 2018.
Corporate Hiring Through Jittery Stock Market Key to 2016 Forecast
Despite a massive correction in much of the globe’s stock exchanges, U.S. gross domestic product (GDP) could continue to grow at a reasonable 2.0%, according to Rajeev Dhawan of the Economic Forecasting Center at Georgia State University’s J. Mack Robinson College of Business.
“The key factor is that companies, despite the jittery stock market and poor results in earnings last year, will keep hiring,” Dhawan wrote in his quarterly “Forecast of the Nation,” released Feb. 24, 2016. “If they pause, income gains will slow and fretful households will save even more, causing a slowdown.”
For the second time in six months, China’s attempt to manage the devaluation of its currency sent shockwaves through global equity markets. Dhawan believes that some nervousness surrounding the markets is warranted, but he called the current situation an overreaction.
“The markets are reacting like a petulant child to the promised fix of a monetary stimulus overseas that is failing to materialize soon enough,” Dhawan said.
The dip in the stock market will have a negative effect on consumer wealth, but nothing like the bursting of the housing bubble in 2008. In fact, falling oil prices will offset most of this negative effect, leading consumers to much better cash flow to start 2016 than at the same point in 2015.
In 2015, consumers used savings from low gas prices for big-ticket items like vehicles, which sold 17.3 million units last year. As a result, retailers are feeling the pinch of the now frugal American consumer.
“The United States accounts for 25% of the world’s consumption, Europe another 25%. Combined, this big engine is not firing on all cylinders for Chinese-made goods,” Dhawan said. “Thus, the Chinese slowdown occurred as a result of our own rational action to consume fewer items they produce.”
He expects that the Federal Reserve will examine investment indicators at their April meeting, and if they are stable, the forecaster expects a June rate hike. After that, rates will stay put until after November.
Regarding the election, Dhawan says two candidates in particular would have a substantial impact on the economy if elected. “If Donald Trump or Bernie Sanders wins, it will drastically change tax policy outlook for coming years. Neither of these candidates seems susceptible to lobbying and the shock to boardroom confidence will result in lower capital expenditure spending and a concomitant growth stall.”
Highlights from the Economic Forecasting Center’s National Report
- Real GDP grew at 2.4% in 2015, will expand at 2.2% in 2016, 2.5% in 2017 and 2.6% in 2018.
- Business investment will grow by 3.0% in 2016, rebound to 5.0% in 2017 and 4.9% in 2018. Jobs will grow by a monthly rate of 174,000 in 2016, 163,000 in 2017 and 137,000 in 2018.
- Housing starts will average 1.191 million units in 2016, rise to 1.255 in 2017 and 1.319 in 2018.
- The 10-year bond rate will rise to 2.5% by the end of 2016 and inch up to 3.1% in 2017.