Big picture: economy rises

From the The Brunswick News

An improving housing market and strengthening labor force has put the Golden Isles economy in line to see some of the best growth since the Great Recession ended in June 2009.

With Georgia's economy predicted to outpace national growth in 2013, the Golden Isles should reflect the trend, economists said Friday at a Georgia Economic Outlook luncheon on Jekyll Island.

"If you look at 2012 out of context, 2012 looks like a lousy year, but if you look at 2012 in context, particularly in light of where we've been, 2012 doesn't look so bad," said Don Mathews, director of the Coastal Georgia Center for Economic Analysis and Student Research at College of Coastal Georgia.

The construction and real estate sectors are on an upswing, but that good news only follows one of the slowest times for the industry. Residential construction saw its worst time over the last five years in 2011, but 2012 increased slightly.

"That's good, but it's coming from such a low number," Mathews said.

While real estate prices have continued to fall, they are expected to rise by about 5 percent in 2013. "I'd like to think that we've hit bottom in the real estate market, but I'm not so sure," Mathews said.

But other sectors of the economy are growing more rapidly and an expanding labor force, with 3,000 more people than a year ago, is a good sign.

Leisure, hospitality and retail sectors, which account for more than 40 percent of Glynn County's economy, are growing. Retail sales are up in five of six coastal Georgia counties.

"We're still not back to our pre-recession peak, but we're close and we're closing in on it," Mathews said.

The Port of Brunswick saw a record-breaking year, said Robert Sumichrast, dean of the University of Georgia Terry College of Business.

"The port had another great year. The port is a real gem that we have. It turned in another record year," Sumichrast said. "We had 18 percent growth in auto and machinery processing."

Governments at all levels - from municipal to federal - will continue to be tight on cash, but Mathews pointed to efforts by Brunswick and Glynn County governments, such as the Gateway Project to improve entry roads and the Altama Community Transformation District to improve areas near the college and Southeast Georgia Health System hospital, as positive economic signs.

"I'm very encouraged by some of the things that we're doing," Mathews said. "We should push them. We should do more. We should do it fast. The returns to those projects, I think, are very good."

The overwhelming message from economists is that 2013 will be a year of improvement, but still could be better.

"I expect more of the same. I expect growth, but weak growth," Mathews said. "Maybe it will accelerate a little bit, but I'm not so sure. Maybe we'll see strengthening, but not as quickly as we'd like to see."

Georgia's economy lagged behind national averages during the recession and in the first years of recovery, but now it's expected to lead the country by a small margin.

Political decisions have also put the national economy, and Georgia's outlook, in a positive light.

"The world's leaders have avoided the biggest mistakes," Sumichrast said, pointing to European leaders who avoided an economic meltdown, Congress having delayed toppling over the fiscal cliff and the passage of business-friendly legislation by Georgia lawmakers.

The state's gross domestic product is expected to rise by 2.1 percent, while the nation's is projected to grow by 1.8 percent.

Still, there are uncertainties.

"There's a real risk that our policy leaders will make policies that will lead us back into a recession," Sumichrast said. "If Congress does not increase the debt ceiling, we will go into recession."

Congress must also take action to stop sequestration - across the board spending cuts - to strengthen the economy, Sumichrast said.

But Mathews says there is no need for mass hysteria.

Government spending is increasing, but it's by a small margin. Spending increased 1.2 percent between 2009 and 2012, the second lowest rate of growth since 1971.

The fiscal cliff was avoided and Mathews says while concerns are still present, traders in the bond market, where debt is bought and sold, do not believe "fiscal disaster stories."

To be competitive, a focus must be on education. A poorly educated work force is not attractive to new businesses or existing companies looking to expand, Sumichrast said.

About 65 percent of ninth graders in Georgia graduate in four years. By comparison, 75 percent, on average, graduate nationwide in four years and 85 percent in European Union countries.

"We need to change the culture of the state," Sumichrast said. "We should put much greater focus on educating our children."

Release Date: 1/19/2013
Source: The Brunswick News