Savannah Chamber

21 4 Since the Georgia Entertainment Industry Investment Act was signed into law in 2008, direct spending by the film industry has increased from $93 million in 2007 to $2.7 billion in FY 2018. Preliminary estimates for FY 2019 indicate that direct spending rose to $2.9 billion, a new record. State incentives help to ensure that nearly all studio space is booked. The Georgia Film Academy helps to ensure that well-trained workers are available. Georgia's diversity of locations provides a good fit for a wide range of film and TV productions. Georgia is at the stage of development where new movie and film production increasingly begets additional movie and film production, but additional progress is uncertain due to divisive state legislation. Nonetheless, as the professional, technical, and physical infrastructure becomes even more fully developed, the economic benefits of each dollar spent on film and television production in Georgia should generate larger economic impacts for our state's economy. Financial services is one of the most economically cyclical industries. The baseline forecast that the late stage economic expansion continues through 2020 favors Georgia's financial institutions. Demographic trends – above- average population growth – will help Georgia's financial institutions. The upcycle in real estate benefits the industry. Rising asset values favor banks' top- and bottom-line growth. The prospects for deposit growth also are good. In 2020, an almost flat yield curve will limit financial institutions' ability to profit from borrowing short and lending long, but higher demand for most types of loans will support Georgia banks' profits. Households' credit scores are at relatively high levels and are not expected to deteriorate too much assuming that recession is avoided. Slightly higher consumer spending should ensure growth of non-revolving credit to households, but banks will tighten lending for auto loans due to rising delinquencies. More major home renovation projects will cause the use of home equity loans to increase. Fewer auto loans and less mortgage refinancing will challenge the bottom line, but regulatory relief will help. Traditional banks and credit unions will see more competition from large retailers, venture capital funds, microfinance, and other non-banks. These nontraditional competitors not as heavily regulated as traditional banks or savings and loans. Mobile banking will transform banking into a much more customer-focused business and could give advantages to technology firms or retailers that invade markets currently served by banks. For nine straight years, Georgia's leisure and hospitality industry has outperformed the overall economy. Assuming that a 2020 recession is avoided, hospitality will continue to do so in 2020, but by a lesser extent than in recent years. Limited service properties that cater primarily to tourists and full-service properties that are popular with business travelers will post gains. Lodging demand will rise very modestly from already elevated levels, however. The long stretch of impressive performance has stimulated new development in many areas of Georgia. In 2020, the number of new hotel rooms completed will exceed demand growth. That imbalance will cause total revenue per available room to grow more slowly, but total revenue will continue to grow faster than GDP. After attaining very high levels, occupancy rates are close to – or past – inflection points in many areas. The growth in the supply of new rooms will exceed increases in the demand for rooms in many markets, reversing the upward trend in overall occupancy rates that the industry has benefitted from for several years. Occupancy rates will decline slightly in 2020. The shift in the overall balance of supply and demand will limit further increases in average daily room rates, thereby restraining growth of overall profits. In places where home sharing companies are rapidly expanding their presence, off-peak rates may even decline. Although the overall economy will grow, there are still some headwinds and downside risks for the lodging industry. The main economic risk for this consumer discretionary industry is the possibility of a recession. There will be more pressure on wages and salaries than in recent years, which will exert pressure on the industry's net margins. Domestically, the main political risks include more federal entry restrictions on foreign travelers and divisive state-level legislation. The shared economy is a major disruptor for the lodging industry, especially for value-oriented properties and bed and breakfasts. Prospects for Manufacturing in 2020 Georgia's manufacturing sector is cyclically sensitive and depends heavily on international supply chains and export markets. Manufacturers' focus on export markets has worked to Georgia's advantage economically. For example, Georgia's exports surged to over $40.5 billion in 2018, up nine percent from 2017. Georgia was the nation's eleventh largest exporting state and its top five markets were Canada, Mexico, China, Germany, and Singapore. The baseline forecast assumes that Georgia's overall economy continues to expand, but due mainly to the trade war the state's manufacturing sector will be in recession in 2020. Industrial production and employment in manufacturing will decrease

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