Savannah Chamber

42 Among the remaining coincident indicators, only electricity sales (+5.6%) and port activity (+1.7%) increased from the third quarter of 2019 to the third quarter of 2020. The pandemic sharply affected airport boardings (-63%), hotel room revenue (-58%) and retail sales (-40%). The Savannah Metro Business forecasting index is designed to anticipate regional economic activity during the upcoming nine- month period. The forecasting index primarily is developed from indicators characterizing the regional housing and labor markets but includes forecasting elements characterizing broader regional and national economic factors. The forecasting index is trended up as 2020 closed but remains 20% below year-end levels from 2019. The decline primarily is attributed to weakness in the labor market. However, healing in the labor market and underlying strength in the residential construction market have pushed the forecasting index up in recent months. The upswing in recent data points toward continued recovery for the regional economy in 2021. Regionally, the health of the labor market began improving in the third quarter and continued into the fourth quarter. Initial claims for unemployment insurance (UI) skyrocketed from about 600 per month to 60,000 in April 2020. The number of claims has trended down since April, falling to roughly 4,500 in December. Consequently, the unemployment rate declined from a peak of 16.6% in April to 6% by November. About 35% of UI claims were for workers in the regional tourism industry. With respect to the intensity of workforce usage, the length of the workweek in the private sector remained declined by 3%, falling to 32.4 hours in 2020 from 33.3 hours in 2019. Average hourly wage held steady in 2020 at $22.74 per hour. In 2021, UI claims initially will increase during the winter quarter, then trend down for the remainder of the year. Length of the workweek and hourly wages will hold steady through the first quarter then begin a modest increase through 2021. In 2021, employment in the Savannah metro area is expected to increase 4%. This is more than double the long-term trend growth rate (+1.7%). Expectations for employment growth in 2021 are strong, but back-loaded toward the end of the year. The pace of acceleration will depend on rising comfort levels among consumers, workers, and employers as vaccinations are administered to an increasing proportion of the population. The annual unemployment rate for 2020 was 7.1%, an increase from 3.4% in 2019. Unemployment is expected to be 5.5% in the region for 2021. Unemployment rates will drift down during the year as the tourism sector slowly heals and other service sector workers return to the workforce. Turning to population growth, the region's long-run attractiveness as a place to live, work, and retire remains unaffected by short- run business cycles. Tourist demographics describe a very desirable pool of would-be in-migrants. The typical Savannah tourist (14.8 million annual visitors) is well-educated and has above-average income. Population growth in 2021 is expected to be above average, driven by employment growth and an emerging pandemic-related preference of people in urbanized areas of the Northeast and Midwest to relocate to areas of lower population density like Savannah. For 2021, population growth is expected to be 1.7%, modestly faster than the 1.4% pace of growth since 2010. After a very difficult 2020, the regional business forecasting index is sending the message of growth for 2021. In a year in which stronger growth is expected in the second half of the year, expected drivers of the regional economy in 2021 will be logistics and distribution, port-related real estate development, residential construction, and - toward the end of the year – tourism and the film- making industry. On the goods-producing side of the economy, manufacturing will continue to expand slowly but gain more ground in the fourth quarter. Construction is poised for a good year amidst favorable macroeconomic conditions with low interest rates, job creation, and migration to the region. The Savannah metro economy will experience notable growth in 2021, especially when compared to the pandemic baseline data of 2020. Economic Foundations The remainder of the forecast considers expected activity in the six major underlying economic foundations of the Savannah MSA economy. Recall that these drivers are (in no particular order) manufacturing, the port, tourism, health care, the military, and real estate development. Manufacturing Manufacturers in the Savannah MSA lost approximately 700 workers (-3.7%) during 2020, reflecting the impact of the pandemic. A review of recent announcements from headlining companies in the sector point toward a brighter year in 2021. The manufacturing workforce was 18,200 at the end of 2020 and is expected to increase in 2021.

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