Robert T. Sumichrast on Wednesday sketched a picture of Georgia's expected 2.1 percent economic growth in 2013. Sumichrast is the dean of the Terry College of Business at UGA. He was speaking in Athens to Rotarians, members of the business community and state and local officials about what he and other researchers project for the state and the Athens community in the coming year. Georgia lost 340,000 jobs during the recession, he said, and it isn't expected to regain them until 2016.
Here are some highlights:
Education. In K-12, Georgia trails the nation, with a 65 percent graduation rate of ninth graders. Nationally, that number was 75 percent. In the European Union, it was 85 percent. It's not that Georgia is doing worse, it's that the competition is doing better. And all the derision heaped on public schools? It's not helping the state's image, and it makes teaching here less attractive. There are students and teachers doing well. Georgia should put more resources into early education, and fully fund Head Start. Education should be a priority for improvement.
The Debt Ceiling vs. Sequestration. Congress has backed away from the fiscal cliff and has given the debt ceiling debacle a short-term reprieve. This ends in May. But if politicians let the Federal Government default on its obligations by not raising the debt ceiling, the country will plunge back into a deep recession. So much for a 2.1 percent growth in Georgia. Sequestration, on the other hand, would produce a 4 percent drop in federal spending--but not necessarily a recession. If Congress doesn't cooperate and compromise to reduce debt responsibly, Georgia's expected GDP will drop by .5 percent.
Bringing Jobs to Georgia. Jobs are coming here, largely because of the low cost of doing business, tax incentives and logistics. In the past year, we've seen Caterpillar, Baxter Labs and GM all coming to Georgia. The state has created a $100 million fund for closing deals with companies, and this makes Georgia more competitive. The state should target industries that expand the economic base and have potential for long-term growth, such as bio- and nano-technology.
Georgia's Restructuring. The public sector has been changing, reducing the size of its staff and cutting back on spending. Many full-time positions will likely become part-time positions, and the public sector will lose jobs for the next 10 years. Just as state government struggles with federal uncertainties, on issues such as Medicaid, so local government struggles with both state and federal uncertainties. Reduced federal spending will slow Georgia's economy, especially if military bases are closed.
Housing is Looking Up. The freefall in single family homes is over. Georgia's home prices are expected to increase by 5 percent in 2013. Mortgage rates remain attractive. Many people are buying homes and living in them, rather than buying them as investments.
This story originally ran on Athens Patch.