There’s a five-letter word, beginning with C, that could help describe an economic uptick in the Augusta area.
An Augusta University associate professor of finance predicted “robust” growth for 2018 in his 10th annual economic forecast for the area, delivered Thursday.
Recent talk of area economic activity often centers around cybersecurity – both its rising presence at Fort Gordon and Augusta University, and its peripheral effect on the labor market and the business climate.
But in moving beyond his actual data, Simon Medcalfe said visible construction activity can be a good informal measure of the Augusta-Aiken region’s economic health.
Medcalfe tracks local economic performance through a composite of statistical indicators called the Augusta Leading Economic Index. He used it in 2016 to predict Augusta’s overall job market would be flat in 2017.
His prediction played out accurately for the first part of this year, but employment spiked in June. On paper, the numbers haven’t yielded an explanation.
“I don’t know why the Leading Economic Index is no longer a good predictor of what’s actually happening in the local economy,” Medcalfe told attendees at the Economic Forecast Breakfast at AU’s Jaguar Student Activities Center. He’s tried introducing new indicators, but it’s been difficult to find monthly data.
“So my conclusion is that it must be something that’s intangible that’s related to the local area that’s not in the data, not something I can pull and say ‘This is what’s causing the change,’” Medcalfe said.
That’s where cranes come in. Analysts sometimes point to the frequency of cranes in an urban landscape to help gauge economic activity. The global construction research firm RLB even maintains a “Crane Index” to measure the phenomenon in certain North American cities.
On a recent bicycle ride through downtown, Medcalfe said he was struck by the number of cranes he saw jutting above the city’s skyline, and across the Savannah River at the Riverside Village development, anchored by the Augusta GreenJackets’ new baseball stadium.
“I don’t remember a time when we’ve had six cranes all in a concentrated downtown area,” he said. “And I think that’s a good indicator of other activity that’s going on, in terms of construction now, but also activity that’s coming in the future.”
In 2016, Medcalfe introduced a Labor Market Index into his forecasting he can apply not only to Augusta, but to other Georgia cities for comparison. It tracks employment, number of hours worked and income, among other factors.
By that index, Augusta is the fourth-fastest-growing city in the state – behind Athens, Atlanta and Hinesville, and just ahead of Savannah and Gainesville.
Medcalfe updated his Leading Economic Index with the latest data from October, made available Monday, and plotted December economic growth for Augusta at 0.8 percent.
What does that mean for 2018?
“I think what it means is the growth is still going to be very robust. The kind of growth that we’ve seen this year is really better than we’ve seen in the past in Augusta,” Medcalfe said. “Is it going to be good enough to catch up with Atlanta and Savannah and Gainesville? I don’t know. But you see in some of the charts that we’re moving in that direction without a shadow of a doubt, so we have that potential.”
Augusta’s housing market also is growing. The average price of a house in Augusta has risen by $27,000 since 2012, according to statistics presented Thursday by AU senior marketing major Tera Bonsell.
Forecasted out through next year, she said house prices are expected to rise by another $6,000 through September 2018.
Medcalfe also concluded Augusta’s quality of life has improved.
His index includes indicators showing more people reporting excellent health, and fewer people reporting obesity, and instances of property crimes and violent crime. From that, he said, “you would associate that with an improvement in the quality of life.”
Reach Joe Hotchkiss at (706) 823-3543 or email@example.com.