UGA forecasters: state economy will rebound in 2021

Economists in the University of Georgia’s Terry College of Business delivered the annual state economic outlook Thursday: Terry College Dean Benjamin Ayers says 2021 could be a year of economic recovery for the state, with the growth rate in Georgia forecast to hit four percent, higher than the nationwide projection of 3.5 percent.

“Our economic forecast for Georgia calls for the economic recovery to continue with the main drivers being consumer spending, the booming housing market and Federal Reserve policies,” Ayers said. “Full recovery of the economy will arrive sooner in Georgia than in the United States. In Georgia, there’s relatively less economic debris to clean up.”

“We are in the second phase of the recovery currently, which is an extended period of choppy economic growth that will linger until an effective vaccine is widely available,” Ayers said. “It’s going to be a slog to get back to a period of steady, above-average economic growth.”

From Merritt Melancon, UGA Today…

The COVID-19 recession only lasted three months, but the plunge was massive. It dropped the state’s employment rate by 11 percent in about a month. That was larger than the drop seen during the Great Recession and much more sudden. While employment has recovered substantially from its low point and will continue to grow during 2021, many industries will not fully recover for several years.

Jobs in entertainment and hospitality may see some of the fastest recoveries, but those will be measured from a near all-time low. It may take many years for the state to recoup the jobs lost in these sectors, according to the Selig Center.

Logistics, distribution, business services, financial technology, education and health services will be the sectors to return to full employment most quickly.

The housing market and home construction experienced a V-shaped recovery during 2020 and is poised to drive a large part of Georgia’s growth in 2021.

Increased homebuilding not only stimulates construction and real estate commissions, but also consumer goods sales, logistics and transportation, and producers of building materials, floor coverings and lumber – all prevalent in Georgia.

Record low mortgage rates and a generational shift will spur the building boom. Millennials who delayed homeownership after the Great Recession are buying homes in larger numbers, while elderly homeowners are opting to stay in place.

The experience of telecommuting and living in a bubble for nearly a year has also increased homeowners’ desire for larger, nicer homes.

To meet that demand, the number of single-family homes built in 2021 will rise by 19% in Georgia. Multi-unit residential construction will increase by 6%.

“These are impressive gains for an economy that is struggling to recover,” Ayers said.

Georgia will also see a marked increase in consumer spending. Leveraging savings laid aside and rising home values, consumers will increase spending on durable goods to furnish their homes. Commercial construction will not see this boom. The market is still absorbing the ample supply of retail and business space currently available.

Another factor buoying Georgia’s growth prospects in 2021 is the culmination of many major economic development projects. Four new Fortune 1000 companies moved their headquarters to Georgia in 2020. State economic developers were successful in recruiting other businesses to migrate to the state as well, despite the pandemic.

“Nine of the 10 largest projects announced in the first three quarters of 2020 were announced after the COVID-19 shutdown began,” Ayers said. “This success reflects many factors that make Georgia a great state in which to do business.”

Cox Media Group