While Georgia’s economy will grow faster than the nation’s in 2016, the pace of job growth in the Peach State will slow, according to the Georgia Economic Outlook report by UGA’s Terry College of Business.
Speaking at the Georgia Economic Outlook series event Jan. 27 at the Classic Center, Terry College Dean Benjamin C. Ayers said Georgians can look forward to a rise in personal income of 5.7 percent and a state GDP increase of 3.3 percent.
“What accounts for our optimism? First, Georgia has a large number of major projects in its development pipeline,” Ayers said. “Second, Georgia’s economy will get more leverage from the housing recovery than the national economy. Third, Georgia will see much faster population growth than the nation. Finally, continued low oil and gas prices are much better for Georgia’s economy than for the U.S. economy.”
Athens’ economy is much less cyclical than either the national or state economy because it’s heavily tilted toward government and health care, according to the report prepared by Terry’s Selig Center for Economic Growth. State and local governments’ budgets are likely to expand in 2016, which is a good sign for Athens’ short-term economic prospects.
In 2016, employment in Athens will increase by 1.5 percent (about 1,400 jobs). Athens will benefit from several factors: Caterpillar’s new factory will expand over the next several years, and the clinical health care industry will continue to grow as will its role as the regional medical service center for northeast Georgia. In addition, the establishment of a medical school campus at UGA in partnership with Georgia Regents University will encourage further development of clinical health care and the biomedical industry.
The report notes that one long-term concern is that Athens is extremely dependent on state government jobs. In 2016, that’s a plus, but it makes the area vulnerable to future efforts to downsize state government. In contrast, Athens’ shares of federal and local government jobs are significantly below the state average, so the area is less vulnerable.
Georgia’s 2016 growth stems in part from projects already in the economic development pipeline, such as Baxter International’s new facility and GM’s IT-innovation center as well as a continued upcycle in the housing recovery, supportive demographic forces and a rise in small business starts and expansions, Ayers said.
But while these projects will create employment opportunities, job growth will slow in the coming year.
“One reason why Georgia’s job growth will slow is that in the wake of the Great Recession many companies were too cautious about hiring and were essentially playing catch up in 2014 and 2015,” Ayers said. “Now, most companies are no longer significantly understaffed. So, this extra push for job growth is gone. A second reason is that businesses’ profits are coming under more stress. That’s partially because expectations about the national and global economies moving into higher gear have not been realized.”
Specifically, Georgia’s nonfarm employment will rise by 2.4 percent, which is nearly half a percent below the estimate for state employment in 2015.