Savananh economic growth in 2013: the picture is getting rosier

If you scroll through my recent posts or read my recent Savannah Morning News columns about the economy, you’ll see that — for a change — I’m somewhat more optimistic than the consensus. (For example: Where’s the Savannah economy headed in 2013?)

If you’re not a longtime reader, it might be worth adding that I was far gloomier than the consensus for several years, beginning around 2006 and continuing until 2010. So this isn’t some pie-in-the-sky dream.

Attendees of last Thursday’s annual economic luncheon sponsored by the Chamber of Commerce heard fairly upbeat forecasts from Robert Sumichrast, dean of the Terry College of Business at UGA, and Michael Toma, the Armstrong economics professor who runs the Center for Regional Analysis.

From the SMN’s: Economic outlook for area brightens, with emphasis added:

The expectation of an economically healthier Georgia is due to a number of factors, he said, including the end of the housing bubble, which dealt the state an especially harsh blow, as well as a number of large projects bringing jobs and investment in 2012. […]

That said, Sumichrast cautioned that uncertainty at the federal level may leave many businesses without the confidence to expand or relocate this year.

“These growth projections are based on several key assumptions,” he said, including raising the debt ceiling, preventing sequestration and the Fed keeping interest rates low and inflation under control.

“If Congress doesn’t increase the debt ceiling, we could be back in a deep recession,” he said. “If sequestration is not replaced with reasonable spending cuts and tax increases, that could shave a half percentage point off the state’s GDP.”

If we have too much austerity too soon, the cuts in government spending will be a huge drag on the national and local economy.

I guess I should add that while I agree with Sumichrast’s characterizations, his forecasts were way off in 2008 and 2009. See my columns about his predictions here and here.

Michael Toma looked in more detail at the local economic data and predicted the following for 2013:

Employment growth – l.5 percent

Unemployment rate – 7.5 percent

Personal income growth – 3.5 percent

Population growth – 2 percent

During the recession, many Americans were stuck in place, burdened by excessive mortgage debt, unemployment or underemployment, and/or collapsing retirement funds. With conditions loosening, we should see somewhat more in-migration to the area.

But 2 percent population growth would be very high. From 2000 to 2010, the Savannah metro area grew by 18.6 percent, which I suppose would work out to an annual growth rate of 1.5 percent or so.

I’d be surprised if we surpassed that.

But I think Professor Toma is being a little too cautious regarding job growth, which has really started rebounding of late. In fact, even with federal budget cuts and tax increases, I’m expecting the current momentum to continue.

I’d say 2.5 percent job growth at a minimum, with a potential upside of well over 3 percent.

Look what happened this year — an increase of over 3 percent in December compared to the previous year:
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