Augusta is expected to start gaining jobs next year. The fiscal cliff will be resolved a few days into January. Georgia’s economy will outpace the nation.
Those were some of the predictions from the annual economic outlook presented Monday in Augusta.
The University of Georgia’s Terry College of Business predicts Augusta will have a 0.4 percent increase in jobs in 2013. Strong performance of the metro area’s services producing industries, notably health care and private education, will be a positive for the local economy – as will construction of the nuclear reactors at Plant Vogtle.
Although economists question the accuracy of the labor statistics, Augusta experienced a loss of jobs over the past year, about 3,500. Mark Vitner, a senior economist at Wells Fargo, said the way contractor changes at Fort Gordon are counted in state statistics has overstated the job losses.
“I don’t think they’re accurate, but even when you make the adjustment for what they’re missing, the end result wasn’t great,” Vitner told business executives and city leaders at the Augusta Regional Economic Outlook at the Augusta Marriott at the Convention Center.
Though opinions differed on the severity of job losses in Augusta, his outlook for 2013 is close to what UGA economists say.
“We will see employment move back into positive territory. Residential construction rises slightly,” Vitner said. “We move past the Fiscal Cliff, even though we don’t get a resolution that people like, we get a resolution.”
Vitner said business confidence is low across the nation, prompting a pullback in hiring. Worry over the fiscal cliff is part of it, but there is also concern about what the Fed will do next, in addition to reaction to more of the Dodd-Frank law taking effect and the parts of the Affordable Care Act rolling out.
Asked about the effect of the new health care law on local hospitals, Robert Sumichrast, the dean of UGA’s business college, said he thinks it will be a wash.
“Will increased regulation increase demand for services where the supply of those services is not going to be increasing? Certainly not in the short term,” Sumichrast said. “There will be greater demand (for services). There will be inflation. There will be opportunities for increased efficiency because of the regulation.”
Said Vitner: “I don’t know if they can reach that lofty goal of being more efficient. But I do know that as government has gotten stingier with reimbursement, we’ve seen layoffs in the health care industry.”
Statewide, government will be the only sector to lose jobs next year, according to the economists.
“State government employment is likely to drop, and local governments – the largest part of government employment in Georgia – are also likely to see more of their jobs evaporate,” UGA economists wrote. “Federal government employment in Georgia will also be affected by the budgetary challenges, and will shrink in the coming years.”
That makes Augusta, with a lot of government employment, vulnerable to job losses.
“I think Georgia’s economy will grow in 2013 and grow faster than the nation as a whole. That’s a change from what you’ve been hearing from me in the past five years,” Sumichrast said. The growth will be about 2 percent.
“There are more areas of the economy that are improving today than there were a year ago,” Vitner said. “The recovery seems to be broadening even though it is only gradually gaining strength.”