November 7, 2001
The latest GDP estimates suggest that our nation currently is in a recession. Until consumers resume their spending and investors regain confidence in the future, this recession probably will continue through the fourth quarter and into next year.
However, those national estimates do not always correspond with what is happening locally. Indeed, estimates of gross state product probably will not be available for this period until well after any economic weakness is over.
Nevertheless, many economic decisions must depend upon local conditions.
To get timely analysis of local conditions, economists turn to employment conditions. Unfortunately, there is no evidence that the Georgia and Atlanta economies have avoided the recession engulfing the national economy.
In the past year, Georgia's goods producing industries lost 29,500 jobs, a decline of 3.7%. As many of these goods are sold outside the state, this job loss will ultimately be doubled by weakness in the service components before economic weakness runs its course. By the end of this year, Georgia's employment probably will trail last the same month last year by more than 40,000 jobs.
Some government projects are preserving employment gains in the mining and gravel industries. Modest gains in printing and paper products also continue.
In all other goods production, activity currently is declining. A six month slump in clothing sales is apparent in the textile and apparel industries. Production of transportation equipment is off sharply, although the latest Lockheed contract might preserve some local jobs. Electronics, machinery, primary metals and lumber production all are off sharply.
Housing, which showed less than a 10% decline in new units this year, might drop twice that rapidly next year because of the job loss currently suffered. Thus, the 5400 lost jobs in construction during the past year could be slightly more than twice that level at the peak of summer construction next year.
Personnel services continues to show the largest job losses in the services sector. However, the once strong computer services has turned negative. Weakness also is surfacing in such areas as lodging, real estate agents, finance, grocery stores, and transportation services (basically airlines).
State government has responded to a 6% plunge in revenues during the initial quarter of this fiscal year by slashing jobs by 1.6%. More reductions will be needed. However, local governments appear to be oblivious to the revenue shortfalls that are swirling around them. Serious slowing from the 2.1% employment gains almost certainly will be needed in the next few months.
The only sector with continuing strength is health services, where 8900 new jobs have developed in the past year. The strong gains in educational and recreational services probably will slow as household paychecks continue to decline.
Paycheck declines almost certainly will slow the growth of retail employment as well. However, the opening of two new shopping malls in the Atlanta area may delay this adjustment until the weakness in goods production runs its course early next year.
Atlanta typically outperforms Georgia because of its smaller dependence upon manufacturing. Only a third of the lost manufacturing jobs in Georgia occurred in the metro area. However, construction is off 7% in Atlanta while it is up elsewhere in the state.
Most of the state and local employment gains in Georgia also have occurred in metro Atlanta. One should not be surprised that a budget problem exists locally. Hotels and finance also are substantially weaker employers in Atlanta than in the state.
Indeed, Atlanta's job losses could reach 25,000 before they begin to turn early next year. That is deeper than the last Atlanta recession and almost certainly will slow population growth in the next two years.