Georgia’s economy will grow faster than its long-run average for the first time since the Great Recession, thanks to increased job growth, rising home prices and a solid economic development strategy. That will be the message delivered by Benjamin C. Ayers, dean of the UGA Terry College of Business, at the Georgia Economic Outlook event Jan. 21 in Athens.
“This will be a positive change from what Georgia has experienced in recent years. Specifically, we expect Georgia’s GDP to grow by 3.2 percent in 2015,” Ayers said. “That’s higher than Georgia’s long-run rate of GDP growth of 2.9 percent and exceeds the 2.8 percent growth we expect from the nation as a whole.”
According to the forecast, which was prepared by the college’s Selig Center for Economic Growth, jobs in Georgia will rise by 2.3 percent throughout the year, completely replacing all the jobs lost by the Great Recession by midyear. Comparatively, the U.S. as a whole will add 1.8 percent more jobs.
Georgia’s biggest job gains will come from construction, followed by professional and business services and mining and logging, Ayers said. The education and health care fields will see modest growth, while the only sector to lose jobs will be the government.
Increases in home prices, a crucial economic engine for entrepreneurs, combined with more favorable demographic trends will help Georgia’s financial institutions. Other economic drivers, such as the Savannah Harbor Expansion Project, renewed in-migration to Georgia and plummeting domestic natural gas prices, will sharpen the state’s competitive advantage.
Although unlikely, the state’s risk of recession is 25 percent. It’s vulnerable to federal spending cuts and Federal Reserve policy, Ayers said.
“Federal spending accounts for only 11.3 percent of Georgia’s GDP, which is below the U.S. average of 16.2 percent,” Ayers said. “Nonetheless, Georgia’s military-base communities are extremely dependent on federal dollars. In fact, Georgia’s dependence on military spending is nearly twice the U.S. average.
“If the Federal Reserve policy shifts from an accommodative stance to a more restrictive stance, it will create more economic drag in Georgia than in other states because Georgians carry relatively more debt and relatively less savings,” he also said. “In addition, interest-saving economic sectors, such as construction, real estate development, building materials manufacturing and forestry have a relative greater impact on Georgia’s overall growth than on the nation’s.”