Fed Shutdowns, Regs, Job Growth Cited at Georgia Econ Confab
With an eye on the national, state and local economic forecasts for 2014, officials from the Federal Reserve Bank and several universities recently gave their take on what the year ahead holds.
The $189 million Southeastern Federal Credit Union in Valdosta, Ga., spearheaded the Valdosta-Lowndes Chamber's Business Outlook forum Feb. 6 ahead of the devastating winter storm that hammered much of the Peach State last week.
Mike Gudely, president/CEO of Southeastern FCU, explained the importance of providing economic projections to leaders, stating “the more successful your business is, the more successful the Valdosta-Lowndes community.”
Tom Cunningham, vice president and associate director of research for the Federal Reserve Bank of Atlanta, predicted little to no movement in monetary accommodation and fewer negative economic issues.
Cunningham said he also expects a 1% drop in unemployment, while also contributing credit to retirees and disabled citizens leaving the labor market. Others leave the labor force to return to school in order to then re-enter the labor force upon economic improvement, he noted.
The largest concerns include government spending, policy uncertainty, government shutdowns, health care issues and an increase in regulations, Cunningham said, adding improvement is still expected in 2014 but by a small margin.
The Federal Reserve plans to make great efforts to see change in a real-time perspective, and tracks the forecast in comparison to the changes seen on the ground, according to Cunningham.
Jeffrey Humphreys, director of the Selig Center for Economic Growth at the University of Georgia's Terry College of Business, provided Georgia's economic outlook.
He predicted a 3.3% growth of GDP and faster growth than in 2013. With 2.2% job growth in Georgia, compared to 1.7% in the nation, Humphreys said he expects the state to outperform the country, leading to a major shift in economic development strategy.
Also on the incline to stability is the recovery of the housing market with industries such as construction, mining, logging and manufacturing leading the way for Georgia, Humphreys said.
Expected losses for 2014 include federal jobs, though state and local government positions are expected to remain stable, Humphreys said. Since the recession, Georgia has recovered 69% of jobs lost, whereas the nation has recovered 90%.
Meanwhile, the agricultural industry is slated to be a bright spot in South Georgia, said Cynthia Tori, professor of economics at the Harley Langdale Jr. College of Business at Valdosta State University, who provided the local forecast.
Moody Air Force Base, South Georgia Medical Center and Valdosta State University were listed among the top 10 employers in the area, she pointed out.
Tori acknowledged that the business community will need to pay close attention to the defense budget due to a high probability of cuts that could trigger a base realignment and closure. In contrast, state funding for education is on the rise, but still doesn't meet the growing demand, she said.
One of the major threats Valdosta faces is the lack of new jobs available to the workforce with stagnant wages potentially having a crippling effect on industry, Tori noted. Government wages, for example, have been frozen since 2007 and low state revenue and high federal fiscal spending are also strong threats to the local economy, she said. Overall, the economic growth expected is modest, with 2014 looking very similar to 2013.
The city's housing market has trended toward stable for the past few years, providing hope for the real estate market, Tori said.
Emphasizing the reality of growth issues, Tori pointed out that Valdosta is currently ranked as the third lowest Metropolitan Statistical Area in the United States. She called leaders to action, addressing the need for critical thinking and problem solving skills to be brought to the decision making table.
“We can sit here and wait to see how things are going to happen, or we can take a proactive approach,” Tori offered, focusing on the need to create a strategic plan to grow existing businesses and bring new businesses to the area.