Valdosta Daily Times

Local News

February 6, 2013

Breakfast draws business leaders to hear expert economic forecast

VALDOSTA — The outlook for growth in the Valdosta-Lowndes County area is not terrible, but it’s not great, either.

At the Valdosta-Lowndes County Chamber of Commerce Business Outlook Breakfast Tuesday morning, economists from Valdosta State University, the University of Georgia and the Federal Reserve Bank of Atlanta projected growth in 2013, but not by much.

Dr. Cynthia Tori, professor of economics at VSU, predicts that the population of Georgia will grow at a rate of 2 percent during 2013, but will match the unemployment rate, showing more of a leveling out rather than an expansion of the job market.

The housing foreclosure rates for Lowndes County have improved, with rates the highest in 31601 and 31605 area codes. And companies surviving the recession include those in retail, health care and social services, leisure and hospitality, and administrative markets, among others, Tori said.

Tori expects continued growth for the region, but a reduction in discretionary spending due to higher payroll and public health coverage taxes. She projects energy prices to rise steadily and state appropriations and regulations to put a damper on market growth.

However, there is light at the end of the tunnel. Valdosta is full of young, well-trained people graduating from VSU and Wiregrass Georgia Technical College who are interested in staying in the region. Expansion of harbors in Savannah and the widening of the Panama Canal could increase capacity for Georgia exports, and the real estate market is stabilizing, Tori said.

“We can’t say we’re just going to go into a hole and hide ourselves,” Tori said. “We have to look for opportunities.”

Dr. Jeffrey Humphreys of UGA believes Georgia’s economy will grow in 2013, perhaps faster than the rest of the nation. Humphreys predicts a 2.1 percent economic inflation for the state compared to a 1.7 percent national figure. Much of Humphreys’ projections are based in politics, he said.

“If we don’t raise the debt ceiling, we’ll go into a much deeper recession,” Humphreys said. “This forecast is based on a reduction in federal spending.”

Humphreys claims it is more important for Congress to act in regard to the debt ceiling than on sequestration of whole portions of the national budget.

“We don’t get a recession if Congress fails to act on the sequester; we do see a recession if they fail to act on the debt ceiling,” Humphreys said.

Humphreys called the political climate “downright hostile” to economic growth, leading him to believe that the recession will continue, but not necessarily worsen.

The housing market in Georgia has improved, he explained, and much of Georgia’s exports go to southeastern Asia rather than to the European Union, where the economy is linked to that of the U.S. However, if oil rises to more than $140 a barrel, Georgia could see yet another recession since its economy relies so heavily on exports.

Because federal fiscal policy and the changes to spending remain uncertain, much of Georgia’s growth will depend on small business in 2013, Humphreys said. He is expecting job growth of 1.4 percent, but that job growth is pacing population growth, leaving the same number of people unemployed.

“It’s new companies that create new jobs,” Humphreys said. “Georgia is making progress, its leaders have made some big changes, and we have a tailwind behind us.”

Dr. Thomas Cunningham, senior economist for the Federal Reserve Bank of Atlanta, had a more optimistic outlook. The Fed predicts growth as high as 2.5 percent, even though “labor markets are complex and are unable to be reduced to a statistic,” Cunningham said.

Because the federal government “is likely to continue on this policy path,” Cunningham said, economic developers must begin looking into the habits of consumers. Auto sales continue to do well, and consumer debt is on the rebound.

“If you want to stay in the game, you have to invest,” Cunningham said. “Kicking the can down the road can work.”

Cunningham reported that the multi-trillion-dollar federal deficit is like firefighters trying to put out a house fire. Firefighters are allowed to break windows, spray water into rooms and other damaging activities because we trust them to stop when the fire is out, Cunningham said.

Like this scenario, Americans should trust the government to stop spending when the economy begins to turn around, according to Cunningham.

“The numbers are really big, but the economy is very big, too,” Cunningham said, but he admitted that the country is on an unsustainable path when it comes to entitlement spending.

Overall, Cunningham’s projection is an inflation of 2.1 percent. He left the stage advising those in the audience to “buy stuff.”

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