Savannah Chamber

47 The Savannah Outlook: 2020 Michael J. Toma Fuller E. Callaway Professor of Economics Parker College of Business Georgia Southern University Michael Riveria, Research Assistant, Department of Economics Since mid-2013, the Savannah regional economy has experienced substantial growth. This trend eased in 2019 and is expected to continue on a similar pace in 2020. Economic growth in in 2020 will be more modest with employment gains of about 1% and population growth slightly below that. This will take place within the context of sub-par economic growth in Georgia and the nation. The underlying diversification of the region's economy contributes to its economic stability and vitality, but the threat of further dislocation resulting from the trade war is likely to undermine economic activity in the Savannah regional economy that is affected, in part, by international trade through its port facilities. For 2020, strength in real estate development, logistics and distribution, manufacturing, port activity, and tourism should propel the regional economy. Fulfillment of plans announced heralding new business starts and expansions in 2018 and 2019 will be key to sustaining employment growth in the region in 2020. The diversification of the regional economy is provided by the strength of its underlying economic drivers that are (in no particular order) manufacturing, the port, tourism, health care, the military, and real estate development. Each of these facets of the regional economy will be discussed after the presentation of a general economic forecast for the region in 2020. General Conditions and 2019 Forecast The Center for Business Analytics and Economic Research (CBAER), a member of the Business Innovation Group in the Parker College of Business at Georgia Southern University produces the quarterly publication, Economic Monitor, that analyzes current economic conditions in the Savannah MSA (Chatham, Bryan, and Effingham counties), and presents short term forecasts for the area (email: mtoma@georgiasouthern.edu). The Center produces the leading (forecasting) index and the coincident index of regional economic activity in the Savannah metro area. The coincident index of economic activity is designed to measure the regional economic "heartbeat" based on factors characterizing the underlying foundational components of the Savannah metro area economy. Following the severe recession of 2007-2009, the Savannah Metro Business coincident index stabilized early in 2010 and started a modest upward trend in 2012. In the latter half of 2013 and into early 2015, the pace of expansion quickened substantially as the annualized rate of growth reached about 5%. The pace slowed later in 2015, but recovered to reach 3.4% through 2018. More recently, annualized growth averaged 2.2% toward the end of 2019 as employment growth slowed to 1%. A primary coincident factor is nonagricultural employment in the Savannah MSA. Employment growth eased through much of 2019 declining from approximately 2.6% annual growth to 1% in 2019. Overall, employment increased to about 187,600 toward the end of 2019. Annual growth was strongest in manufacturing (+1,000 jobs, +5.5%), leisure/hospitality (+600 jobs, +2.3%), retail trade (+500 jobs, +2.3%), and education and health (+500 jobs, +1.9%). Construction, wholesale trade, and transportation each added 200 jobs. Other sectors of the economy generally held steady or added one hundred jobs, except for business and professional services that shed 1,500 workers in 2019. The pace of growth in leisure/hospitality reflects strength in the regional tourism industry, however, the weakness of business/professional services is somewhat troubling, as this sector is an important bellwether of regional economic activity. The headwinds faced by business and professional services started in the latter half of 2018 and continued into 2019. Many of these enterprises are small, locally grown firms and weak business and professional services employment numbers represent slackness in the overall demand for business support services in the region. The remaining coincident indicators (port activity, electricity sales, hotel room revenue, airport boardings) increased in 2019 as compared to 2018, but the rates of growth slowed considerably. Port activity (containers handled) increased substantially (+7%). Indicators of the tourism industry also demonstrated growth, with hotel room revenue increasing about 2% and plane boardings

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