Savannah Chamber

11 5 One factor to consider is that many of the new post-pandemic jobs are not in the places where workers currently live. People moved to less dense and more remote locations creating job opportunities in their new places of residence, but reduced job opportunities in the places they left behind. For example, there are fewer restaurant jobs available in large-city centers and more available in the suburbs or in small towns. It takes years for workers to move to where the new jobs are available. On the net, this realignment of jobs will not determine the overall pace of US economic growth but may intensify effects of the economic slowdown in larger metropolitan areas and lessen the effects of the slowdown in suburban areas and small towns. Regionally, this realignment of jobs benefits the South (e.g., Georgia) and costs the Northeast (e.g., New York). With labor force and job growth in balance, the US unemployment rate will rise only slightly, from 4.1 percent in 2024 to 4.3 percent in 2025. The rise in the unemployment rate will mostly reflect less hiring rather than more layoffs. The unemployment rate will be above the economy's full employment unemployment rate of about 4.0 percent, which reduces pressures on wages and benefits. Accordingly, we expect less traction for wage-push inflation. With the unemployment rate slowly rising, the balance of power slowly shifts to buyers of labor (employers) from sellers of labor (workers). Employers that have struggled to increase staffing fast enough to keep pace with rising demand for goods and services will find it a little easier to reload their workforce. Nonetheless, widespread recognition that labor markets will be tight over the next decade due to slower growth of the working-age population will sharply limit layoffs in 2025. Employers will not have the upper hand to the extent that they have had in past economic slowdowns. Once the slowdown ends and the economy begins to accelerate, it will quickly become more difficult to hire workers across many occupations and industries. Workers of all types will be in short supply due to demographic trends that are less favorable to labor force expansion than in the past. Indeed, demographic trends (e.g., low birth rates) suggest that unless foreign immigration is strong a shortage of workers could be a feature of the post-pandemic U.S. economy, which is only occasionally interrupted by recessions. That bodes well for an eventual rebalancing of income from capital to labor, which should help to reduce inequalities in income. Unless productivity grows faster than in previous decades, slower labor force and population growth means slower economic growth. To a greater degree than in prior decades, the economies of states with significantly above-average population and labor force growth (whether due to domestic migration or foreign immigration) will outperform the economies of states with below average growth population and labor force growth. Housing Home sales and homebuilding were important drivers of US GDP growth in 2020-21, but single-family housing activity subtracted from GDP growth in 2022-23. High mortgage rates and the recent run up in single-family home prices dramatically reduced housing affordability, which put the nation's housing industry into recession. In 2025, slightly lower mortgage rates, good labor market conditions and a scarcity of single-family homes for sale will support an upturn in single-family homebuilding. Demand for owner-occupied housing that was not satisfied in 2020-24 (due to shortages of homes for sale, shortages of building materials, and shortages of construction workers) will support higher construction of new single-family homes. Sales of both new and existing single-family homes will rise. Millennials are reaching the age where they will buy homes in larger numbers, especially in Southern and Western states where overall population growth is stronger than in other regions. It is likely that the pandemic caused a structural shift that favors owner-occupied housing over rental housing and low-density housing over high-density housing. Telework at scale, distance education, more caregiving at home, more recreation and entertainment at home, and wider recognition of the health benefits of social distancing make the home more important and more valuable to people. Such trends favor home ownership, especially the single-family detached house. The 2025 economic slowdown will not change those dynamics. The greater acceptance of remote work and remote education means that families need more space at home. Put it all together and people are willing to pay more for a single-

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