Economic Forecast: Georgia’s Job Growth Expected to Moderate
By Rajeev Dhawan, Zwerner Chair of Economic Forecasting and director of the Economic Forecasting Center at Georgia State University’s J. Mack Robinson College of Business
A strong dollar, trading partner growth woes and factors beyond American borders will continue to have a moderating impact on Georgia’s manufacturing and corporate sector gains. In the first half of 2017, Georgia experienced mixed job growth among sectors, but overall growth declined.
The corporate sector added 11,100 jobs in the first half of 2017, compared to 20,900 jobs added in the second half of 2016. After adding 3,800 jobs in the last half of 2016, the manufacturing sector decreased by 3,200 jobs from January through June 2017.
Another catalyst sector, information technology, added 4,100 jobs during the first half of 2017, compared to no gain in jobs in the second half of 2016.
Financial services, wholesale trade and transportation also added more jobs from January through June 2017, compared with July through December 2016. Healthcare added fewer jobs over the same period. These sectors represent industries with a larger share of Georgia’s higher paying jobs. Collectively, they added jobs, but at a 10 percent moderation from the last half of 2016.
During the past two years, hospitality, retail trade and education kept Georgia’s job creation engine humming despite global headwinds. But, over the first six months of 2017, these sectors added jobs at only half the pace compared to the end of 2016.
As consumers shift away from shopping in brick-and-mortar stores to online retailing, retail trade employment has suffered. But buying online has led to gains in the transportation and warehousing sector.
Hiring in the education sector has been mixed because it is linked to city and local entity tax collection. Individual tax revenues in fiscal year 2017 posted a year-over-year increase of 5.2 percent, less than the previous fiscal year’s growth of 7.9 percent. However, sales tax collections are improving because of an increase in construction in metro Atlanta, Savannah, LaGrange, Columbus, Macon, Dalton and Valdosta.
The ongoing moderation will not reverse course, as not much improvement is expected in the global economy. Oil prices will remain low and Chinese efforts to manage its runaway debt will produce a slowdown to its supplier nations in the emerging economies.
Domestically, no new spending or infrastructure plans are planned for the next six months. There is a good chance income tax cuts geared toward the middle class will help with consumer spending, but they will not be enough to overturn the trend of moderation.