Savannah Chamber

25 center in DeKalb County; Pratt & Whitney will create over 500 jobs in an expansion of its facility in Columbus; and Amazon will create over 500 jobs at a new fulfillment center in Macon. Another reason Georgia is doing well is that the U.S. automobile manufacturing industry is becoming increasingly concentrated in the Southeast. When it comes to both distribution and consumer markets, Georgia is in the sweet spot in the middle of the "Southern auto corridor" with proximity to major assembly plants, major suppliers, interstates, ports, and rail. Georgia's major projects have included KIA's assembly plant in west Georgia and Mercedes' corporate headquarters in Atlanta. The new Volkswagen assembly plant just across the state line in Chattanooga and the recent announcement that Volvo will build an assembly plant in Charleston make Georgia an even more attractive place to site automobile parts suppliers. Due to cost, logistics, and tax advantages, Georgia is very competitive with other states when it comes to landing economic development projects. Many companies move to Georgia to cut costs. As noted above, these advantages bore more fruit in 2012-19. That is partially because Georgia made several strategic shifts in its economic development strategy, including the elimination of sales and use taxes on energy used in manufacturing, and a greater emphasis on workforce training as an economic development policy. Job training programs and new highly specialized workforce training centers will increase the supply of highly skilled workers thereby attracting businesses with high-paying jobs. Overtime a workforce centric approach towards economic development should raise both productivity and per capita incomes. The exemption for energy used in manufacturing was phased in and reached 100 percent in 2016. In addition, in 2016, business inventories became fully exempt from the state property tax and most counties – 85 percent – already have level one Freeport exemptions. These changes in tax policy will boost Georgia's economy in 2020. Legislation has made Georgia more competitive, but Georgia will have to be very aggressive in closing the right deals. Georgia should target industries that expand the economic base and have good potential for long-term growth. Georgia must invest strategically and grow clusters in areas ranging from biotechnology to advanced manufacturing. The focus should be on innovation-based companies. Of course, Georgia must also make sure that its statutory incentives remain competitive – the statutory incentives help to get Georgia short-listed by site selection professionals. Then, only after Georgia is short-listed, do those critical deal-closing incentives come into play. A review of economic development announcements issued by the Office of the Governor and the Georgia Department of Economic Development indicates that economic developers are closing many deals in industries in which the state has the ability to produce at a low opportunity and marginal costs – comparative advantage. Specialization in activities where Georgia has comparative advantage bodes well for sustained success of the companies that received incentives thereby enhancing the prospect for long-term economic growth. Logistics, transportation, distribution, warehousing, information technology, transactions processing, headquarters operations, floor coverings, automotive parts, food processing, and professional and business services are good examples of industries where Georgia competes effectively. Housing Recovery Despite recession fears, major supply-side constraints, and fewer tax benefits associated with owning a primary residence, Georgia's home building industry is likely to grind higher in 2020. Sales of new homes, permits to build new single-family homes, permits to build new multi-family homes, and home repair and renovation activity will increase. In contrast, sales of existing homes will decline due to a persistent shortage of inventory. Home price appreciation will continue to exceed the rate of inflation, but the year-over-year percentage gain will be much smaller in 2020 than in recent years. Increases in demand for housing will stem from recent job and population growth. In addition, investors will be active. Persistent low inventories of homes for sale and higher rents ensure that the increased demand for housing will boost new single-family and new multi-family home building. The baseline 2020 forecast for the U.S. and Georgia calls for continuing, albeit much slower, job growth reinforced by modest gains in real wages. The new jobs and slightly bigger inflation-adjusted paychecks will give households the wherewithal to buy homes. Mortgage rates will be very low in 2020. Indeed, the rare combination of affordable mortgage rates and a very low unemployment rate will support real estate markets in 2020.

• Cover