At an event hosted by the Bank of North Georgia, Dr. Albert W. Niemi, Jr. – Dean of the Cox School of Business at Southern Methodist University – provided an Economic Forecast for 2014. The presentation highlighted the general economic trends facing the United States overall and the State of Georgia in particular, in addition to highlighting both challenges and requirements for future growth.
The U.S. economy is expected to make some progress in 2014. Real GDP is expected to rise to 2.4%, compared to 1.7% in 2013 and 2.2% in 2012. Furthermore, the unemployment rate is expected to decline to 7.1%, down from 7.5% in 2013. Preliminary job growth figures from January-October 2013 show that the U.S. economy is adding 180,500 net jobs per month. If that number rose to 200,000 jobs per month, the U.S. is would reach full employment by 2029.
Housing starts are also projected to increase in 2014 to 1.0 million, up from 850,000 in 2013 and 580,000 back in 2010. This marks a steady increase back to housing start levels in the 2000-07 period of 1.8 million/year. Of these housing starts, 45,000 are expected to be in Georgia, up from 34,000 in 2013.
However, there are still areas for improvement in the U.S. economic forecast. 53% of recent college graduates are still jobless or underemployed, primarily because college diplomas are worth less today than they once were and students need hard skills to find employment. The labor force participation rate was at a 35-year low of 63.2% in August 2013. Consumer spending is also still expected to be sluggish.
In the realm of federal public policy, the Bush Tax Cuts expired in 2013, government spending is being cut and Medicare and Payroll taxes have increased. On the state and local level, we are also witnessing spending cuts and tax increases. Dr. Niemi also identified 10 challenges to America’s global standing.
The states expected to perform best in the economy are those with low taxes, low cost of doing business, free labor markets, location advantages, business friendly environments and quality of life.
The State of Georgia is experiencing economic growth. In 2014, the State’s real GDP is projected to be higher than the national GDP at 3.0%, and while unemployment is still projected to be higher than the national average at 8.0%, it is a 0.5% decline from 2013. Dr. Niemi outlined the three areas that are crucial to Georgia’s economic recovery:
In this regard, things are looking up for Georgia. Housing starts are rising in the state. Furthermore, Georgia was the 3rd largest net gainer in terms of in-migration over the past 6 years, and is expected to have population growth over 30% from 2010-2030.
Georgia is also rising in the state rankings of job gains and losses. While Georgia was ranked 26th from the Dec. 2000-Aug. 2013 period, it has jumped to 8th in the Jan. 2010-Aug. 2013 period, with 200,000 jobs gained during that time frame.
The Council for Quality Growth remains committed to continued economic growth in the Metro Atlanta region and the State of Georgia overall, and looks forward to working with both public and private stakeholders to help Georgia to reach its development potential.