On Wednesday, the Georgia State Economic Forecasting Center in the Robinson College of Business hosted its quarterly conference – this one titled “The Future is Paved With Good Intentions.” There were several guest speakers at the event, including Michael Drury, Chief Economist from McVean Trading and Investments, LLC, Paul Thomas, Principal and Co-Founder at Economic Stories LLC, David Palinski, Senior Vice President and Chief Financial Officer at the Georgia Aquarium and the main event, Rajeev Dhawan, the Director of the center and perhaps Georgia’s economic forecaster-in-residence.
Drury started out the program discussing the locomotive of the global economy and the roles the US, China, Europe, Japan and a fresly Brexited UK in the changing economy. Drury discussed the possible effects of the elections in the U.S. and Europe and party promotions in China. He laid out some of the global growth projections, including a decline in the Euro area of .2%, a decline in China of .4% (although still a quite healthy 6.2% growth rate, and a decline in the UK of .7%. Drury expects growth in the U.S. to inch up to 2.2% next year, a .6% increase from 2016. One interesting data point from Drury compared new student loans to net business investment. In the second quart of 2016, the most recent data available, students loans amounted to approximately $90 billion, net business investment including depreciation came in at a loss of approximately $50 billion.
Thomas’ presentation focused on information technology and productivity stagnation and some of the, perhaps irrational, factors that contribute to GDP growth and the way it is perceived. Some of Thomas’ went back to economic basics and was a primer on economic lessons like comparative advantage and productivity. The U.S. does not spend human capital on certain jobs like we used to.
Thomas used the example of an old-fashioned home-cooked meal, which we are unlikely to produce unless we “cheat” and use modern agricultural methods to acquire food, use kitchen pots and pans made from exotic materials, modern ovens and ranges. Grandmother and other makers of those old-fashioned meals have found a better way to spend their time that returns a higher income or return for herself. Thomas also touched on the economy in China, pointing out that Chinese productivity growth is at a 16-year low. Average labor productivity in China is less than a tenth of what it is in the United States.
Palinski’s presentation on the aquarium discussed the history of the area, their work with veterans, education programs, animal care, their research and conservation efforts and the economic impact. Since 2007, attendance at the aquarium has been between 2 and 2.4 million visitors annually, more than the Braves and attendance is expected to grow in 2016 with the addition of the sea lion exhibit. Since the opening of the aquarium, there has been $1.25 billion in new investment in the Centennial Park Area, with an additional $136.4 million in the pipeline. In the past three years, more than 380,000 visitors to the Georgia Aquarium used Atlanta’s City Pass and on average City Pass users visited four attraction, 97% of the time that included the Georgia Aquarium.
As for Dhawan, he predicts job growth will stall in the Atlanta area next year as the Trump administration begins to set policy around trade. The Fed is likely to still raise interest rates and this will likely stall some purchases of homes and automobiles. Trump’s plans on infrastructure spending may offset any drag from tariffs or other international trade policy but Republicans in the legislative branch may be less than thrilled to go along with those plans. Dhawan also outlined how possible tariffs could ultimately lead to a stronger dollar, making U.S. exports more expensive and raising interest rates.
