ATLANTA – Next year will be the year Georgia recovers from its nearly two-year slump linked to COVID-19, according to economic forecasters at the University of Georgia.
“We expect Georgia’s economy to fully recover next year – it will be 100% of normal by mid-2022, if not sooner,” said Benjamin C. Ayers, Dean and Earl Davis Chair in Taxation at UGA’s Terry College of Business.
Despite the challenges of the ongoing pandemic, Georgia’s economy is on the verge of completing its recovery faster than that of other states, Ayers said on Monday as the Atlanta kicks off the 39th annual tour of the United Nations. economic outlook of the university in Georgia.
Economists are expected to stop in cities across the state to forecast the outlook for various economic regions through February 8.
“We are well; we will continue to do well in 2022, ”said Ayers. “The growth pattern we have seen, where we have a slightly faster economic recovery in the state of Georgia than in the United States, will continue into the next year.”
Among the good news in the forecast for 2022 is Georgia’s gross domestic product, which is expected to rise 4.3% inflation-adjusted, slightly more than the 4% expected for the United States.
Employment is also expected to overtake the rest of the country, he said, growing by 3.2%, compared to 2.7% nationally, leaving Georgia with an average annual unemployment rate of 3.2%, 0.5% lower than the rate of 3.7% estimated for 2021.
Ayers listed several factors driving Georgia’s rapid growth, including a large number of ongoing economic development projects, competitive incentives for economic development, more foreign direct investment, a boom in home sales, and vehicles and heavy immigration from residents of other states.
Nonetheless, there are potential risks to Georgia’s recovery, the most important of which would be a more dangerous variant of the virus.
“As we all know, the pandemic is not over yet,” Ayers said. “We expect each subsequent wave of cases to do less damage to the economy, and we’ve seen this before, but it’s possible that more deadly mutations in the virus will develop.”
A worse-than-expected material shortage could also hamper Georgia’s economic growth.
“We have certainly seen supply issues ranging from shortages of raw materials, intermediate products, finished products, as well as the shortage of workers,” Ayers said. “These challenges have slowed growth this year and will do so again in 2022.”
Inflation is already a headache for Americans, and it could prove to be a stumbling block for the Georgian economy as well, he said.
Mark Vitner, managing director and senior economist at Wells Fargo, said he’s more pessimistic than most about inflation, which he says is higher in Metro Atlanta than in any other region. metropolitan area of the country.
“The reason it’s so much higher in Atlanta than in other parts of the country is that all of those Yankees are moving here,” he said. “I hate to break it down so simple, but it’s really all the people coming from the North East who have a lot of money because they have sold their house for a very high amount and they have bought more expensive houses here,” this pushed the median price of a home higher. We’ve also seen rents in Atlanta go up by about 20%.
Vitner said supply shortages are only partly responsible for the growth in inflation.
“(Inflation) is going to create more long-term problems for the economy than anyone currently hopes, because the longer inflation persists, the more assets are poorly valued and distributed, and that’s what triggers recessions, ”he said.
While economists’ predictions may be a relief for many Georgians, the recovery has so far not affected all residents equally.
According to October data from the Center on Budget and Policy Priorities, 18% of Georgian adults living with children said that children in their household were not eating enough because of their finances, compared to 12% nationally.
And nearly a quarter, 23%, of Georgian renters are behind on their rent, compared to one in six nationally, and young people, blacks and Latinos suffer more than other Georgians.
And unlike other figures in optimistic projections, the state’s nominal personal income will only increase by 1.9% in 2022, which is lower than the gain of 7% estimated for 2021.
“This sharp slowdown in personal income reflects the end of federal stimulus programs which provided large transfer payments to individuals rather than slower growth of the Georgian economy,” said the economists report. “In contrast, personal income based on wages and salaries will grow faster in 2022 than in 2021.”