Savannah Chamber

17 1 Georgia Outlook 2022 Jeffrey M. Humphreys, Terry College of Business, University of Georgia Georgia's economic recovery is expected to continue at an above-average pace in 2022, with the upside and downside risks evenly balanced. Of course, Covid-19 is the main risk to growth. On the positive side, consumer spending out of accumulated savings, the housing boom, federal stimulus, and economic development project announcements could be stronger than we expect, which would boost the pace of growth. While the pandemic's damage was substantial, Georgia's economy was not hit as hard as the U.S. economy. For instance, Georgia's 13 percent peak-to-trough job loss was smaller than the U.S. peak-to- trough job loss of 15 percent. As of mid-2021, Georgia recovered 85 percent of the jobs lost to the recession whereas the U.S. recovered only 74 percent of the lost jobs. State-specific forces that will sustain Georgia's rapid economic growth through 2022 include: (1) the build- out of many economic development projects; (2) competitive economic development incentives; (3) more foreign direct investment; (4) the housing boom; (5) higher vehicle sales; (6) strong performance of the transportation and logistics industry, especially Georgia's ports; (7) good prospects for Georgia's military bases; and (8) demographic trends. The 2022 forecast calls for Georgia's inflation-adjusted GDP to increase by 4.3 percent, which is slightly more than the 4 percent rate expected for U.S. GDP. Nonfarm employment will rise by 3.2 percent, which exceeds the 2.7 percent national gain. The unemployment rate for 2022 will average 3.2 percent, or 0.5 percent lower than the 3.7 percent rate estimated for 2021. The state's nominal personal income will grow by only 1.9 percent in 2022, which is lower than the 7 percent gain estimated for 2021. This sharp slowdown in personal income reflects the winding down of federal stimulus programs that provided large transfer payments to individuals rather than slower growth of Georgia's economy. In contrast, the wage and salary- based personal income will grow faster in 2022 than in 2021. The pattern of job growth across Georgia's industries will be different than it was before the virus crisis. Several of the industries hit hardest by the pandemic—such as bars, restaurants, and airlines--will post fast growth, but the gains reflect rebounds off depressed levels as well as improving economic fundamentals. Some may never recover (e.g., movie theaters). In contrast, logistics, distribution, warehousing, professional and business services, the information industry, and fintech recovered quickly. In addition, positive job growth will occur in manufacturing, financial activities, utilities, and education, but full recovery may take some time. Due to the strong housing market, building contractors will be hiring. Retailing will add jobs, and state and local governments will begin to add back some of the jobs lost to the recession. None of the state's major economic sectors will experience job losses, which has not happened since before the pandemic. Services Georgia's major categories of services-related businesses will expand, thanks to the upturn in housing markets, growing demand for healthcare, education, business and professional services, and financial services, among others. The large, well-established, cluster of fintech companies fared relatively well during the recession. The industry itself received a boost from the Covid crisis because contagion fears pushed people to adopt new mobile technologies, including mobile banking and touchless payment systems.

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