There were lots of different adjectives used by the press when the Bureau of Labor Statistics announced on Friday that the U.S. economy added a seasonally adjusted 96,000 jobs in August. I used the word “disappointing” on my blog, and I thought the popular “tepid” was pretty close to the mark. There were darker characterizations, but I think those overstated the case.
While the pattern has been erratic and noisy, we’ve seen slow but steady job growth for the past year. But the job growth in many months hasn’t even been enough to keep up with population growth, much less to make any serious progress in regaining the jobs lost in 2008 and 2009.
Sure, the national unemployment rate fell in August to 8.1% from 8.3% the month before. But the decline was only about
1.5% .15% in actuality (the numbers are rounded), and the decline was mainly related to a .2% decline in the labor force participation rate.
In the latest data available for Georgia, the unemployment rate climbed to 9.3% in July from 9.0% in June. The July rate is the highest we’ve seen since last December, but is still well below the 10.0% rate in July 2011.
So where are things headed from here? What are the prospects for a faster jobs recovery in the state?
Not very good, according to the latest predictions by Rajeev Dhawan of the Economic Forecasting Center at Georgia State University’s J. Mack Robinson College of Business, “Anticipation Effect” to Stall Economic Growth Into 2013:
The impending fiscal cliff, political dithering, plunging corporate confidence and an iffy consumer mood are among the factors causing Georgia’s economic growth to pause, according to Rajeev Dhawan of the Economic Forecasting Center at Georgia State University’s J. Mack Robinson College of Business. Also contributing to the standstill are falling demand for exports and the rising price of oil.
Some details from the latest report, which puts special emphasis on the global economic slowdown:
- Georgia’s employment base will grow by 41,300 jobs in calendar year 2012, including 8,800 premium jobs, for an annual job growth rate of 1.1%. The recovery will be similar in 2013 when the state adds 42,600 jobs (0.8% annual job growth rate) with 9,300 premium jobs among that number. In 2014, new job numbers will rise to 69,600 (1.6% annual job growth rate) including 13,200 premium jobs.
- Georgia’s unemployment rate for 2012 will be 9.1%. With tepid job growth in 2013, unemployment will rise to 9.2%. When growth picks up in 2014, unemployment will decline to 8.5%.
- Statewide nominal personal income will rise a moderate 3.4% in 2012, increasing to 3.6% in 2013, with an anticipated strong increase of 4.8% in 2014.
- Atlanta’s employment base will grow by 29,800 jobs, including 6,500 premium jobs, for a growth rate of 1.5%. Job growth will show similar strength in 2013, when Atlanta adds 32,900 jobs, of which 7,900 are premium jobs (1.1% growth). In 2014 metro area employment growth will pick up with 54,200 jobs (2.1% growth) with 12,300 premium jobs.
- Atlanta housing permits will increase by 37.0% in 2012 to 11,557 units, due to an 82.6% rise in multifamily housing permits. Permit activity will increase by a paltry 0.8% in 2013, but will grow strongly in 2014, posting an overall increase of 26.6%.
Dhawan’s latest forecast is consistent with various predictions that the Georgia economy won’t reach its pre-recession level of employment until late in this decade.
I think it’s worth noting that this economic forecast isn’t going to change substantively if Obama wins or if Romney wins. It’s hard to say at this point who would more effectively deal with the fiscal cliff — the year-end expiration of a variety of tax cuts and the beginning of deep mandated cuts under “sequestration.” And even if we agree on policies that minimize the immediate damage to the economy while maximizing the chances for long-term deficit and debt reduction, we’re simply looking at a slow recovery.
Recoveries from financial crises are routinely choppy. Demand reamins weak. Residential investment is currently rebounding but remains depressed by ordinary historical measures; new home construction is generally a leading driver out of a recession. Georgia in particular had an economy largely dependent on real estate and physical growth.
Personally, I wanted more aggressive actions on the economy in recent years from both the Fed and the Obama administration, but I doubt that stronger measures would have been possible politically. But even the most extreme steps would likely have only bent the employment curve slightly upward. (Of course, even a slight improvement could mean better quality of life for millions of Americans.)
Public policy still matters, of course. And the small business owners that I routinely interview for my Savannah Morning News columns pretty much never mention federal policies or regulations. I hear routinely about state-level issues, but far, far more about local ones — slow permitting processes, contradictory bureaucratic responses, outdated zoning, and so forth.
I think our governments — especially local ones — need to spend a lot more time listening to small entrepreneurs about policies that would encourage job growth. Then maybe we’ll see better forecasts over the next year or so.