Rajeev Dhawan, Director of the Economic Forecasting Center at Georgia State University, released his quarterly economic forecast on Wednesday. The report detailed predicted job growth and the impact from global trends on the state’s economy.
Overall, Dhawan says the state will see job growth of 1.8%, similar to the rest of the country. Metro Atlanta’s hiring will slow a little but some of Georgia’s other main cities, Augusta, Savannah and Gainesville, will see better hiring numbers. Only 46,500 jobs have been added this year, compared to nearly 104,000 in this period last year. Georgia’s growth last year was quite good and to keep up with that pace was unsustainable. Dhawan predicts by the end of the year, Georgia will have added a little more than 75,000 jobs, a 2.5% growth rate. Dhawan’s outlook for 2016 shows a similar jobs growth.
China’s “full-blown stall” combined with a slowdown in Europe has hit Georgia’s manufacturing sector and other exports. Domestic improvement has been able to counteract some of the negative pressure from global markets but a slowdown is inevitable. The hospitality sector has been doing well, growth of 5%, thanks to an increase in the number of conventions. The healthcare sector is doing even better, to the degree that one in every four new jobs comes from healthcare, totaling more than 11,000 new jobs.
The likely coming rate hike from the Federal Reserve could have a good impact according to Dhawan. According to a story by Reuters, Atlanta Federal Reserve President Dennis Lockhart is “comfortable with moving off zero soon” but this is dependent on no mitigating economic deterioration in the meantime. The margin of error is small with a GDP growth rate of 2% but a rate hike may help in certain areas such as home buying. Potential home buyers turn into definite home buyers before rates increase and this can help appliance and construction purchasing. Dhawan is looking for expected housing starts to increase by more than 1.2 million units in the next year.
Uncertainty based on political events may also have a big impact on the economy in the coming year – continued worry about government shutdowns, budget crises and the presidential election all could spell trouble for economic growth. The presidential election in particular may cause market anxiety. Dhawan wonders what the impact from potential candidates may be, saying, “You could have two candidates running next year and business looks at them and thinks, ‘We’re in trouble with either one.'”
The still-potential rate hike looms large over the “less-than-robust” economy. Rate hikes are intended to slow the economy but if the stock market turns too fast, combined with global slowdowns, 2016 may be a tough year. In addition to the likely rate hike in December, a rumored rate hike in March could be coming but if January turns sour, the Fed may rethink their plans.
