ATLANTA — The economy will eventually improve in Augusta, but not before months of “dim growth prospects” caused by concerns over the “fiscal cliff” and contraction in Europe, according to a forecast released Wednesday by the Economic Forecasting Center at Georgia State University.
“Consumers haven’t pulled back, but the economy is experiencing a growth slowdown, but thankfully not the freefall of late 2008,” said Rajeev Dhawan, the director of the center. “Thus, the desire to be cautious about spending by both consumers and corporations is bearing on us in the coming six months.”
Metro Augusta reversed a trend by adding jobs in the July-September quarter after losses in the five previous quarters. The biggest gains came in the leisure/hospitality and government sectors, which added nearly 1,500 combined, and in manufacturing and education/health.
“Our forecast calls for a drop of 0.3 percent in total employment for 2012, followed by a decent 0.8 percent increase in annual non-farm employment in 2013,” Dhawan said.
Overall growth for the state will be weak through the first half of 2013 but begin improving, becoming steady in 2014.
The forecast calls for 1.2 percent job growth this year and an even more tepid 1.1 percent in 2013.
That means an unemployment rate of 9.1 percent for 2012 and an 8.9 percent rate in 2013.
Dhawan isn’t worried about a recession being triggered by the “fiscal cliff” of federal spending cuts and tax increases scheduled to take effect Jan. 1. He expects the politicians to soften its blow and says problems in Europe are much worse.
“Things will improve afterwards as we make a credible down-payment schedule to solve our fiscal issues – again, a big if,” he said.
Europe’s troubles and China’s slowdown will cut into Georgia’s exports, especially for aircraft like those made by Gulfstream and for machinery and automobiles like Kia makes in West Point. The leisure/hospitality segment will continue its slow pace, expanding payrolls by just 0.6 percent this year and 1 percent in the next.
The sectors with the strongest job growth this year will be professional/business services at 4.7 percent and transportation/equipment at 4.8. The weakest are shrinking, such as real estate, which is down 5.3 percent, and mining and construction, which are off 3 percent each.
Retailing, which is a major employer, comes in the middle. It will add jobs at a 2.5 percent rate this year and 1.4 percent the next.