Water, Water Everywhere: An Update on the Georgia Economy
Well, it appears that Georgia now has a monsoon season. And that season is apparently now. The National Weather Service estimates that in the first seven months of the year, 45.8 inches of rain fell in Atlanta, already putting us well ahead of 2012’s total rainfall. Only seven years on record have had more rain so early in the year. And rain brings with it some friends, some more welcome than others. Mosquitoes and snakes are purportedly starting to make their way out in greater numbers. But, even if the sun isn’t literally shining much on the Peach State, things are starting to look a lot brighter on the economic front.
Georgia has seen a solid bout of employment gains so far this year, as economic headwinds diminish and hiring becomes more widespread. Growth has been led by remarkable strength in business services employment, a broad sector that includes things like administrative services, temporary help, and technical and scientific services.
The employment expansion has become increasingly broad-based, as the chart below depicts. In this chart, each bubble represents a sector—with the circumference of the bubble reflecting the relative size of that sector’s employment in the state. Each bubble’s location in the graph shows that sector’s employment momentum: the farther a sector is to the right, the stronger the 12-month performance, the closer to the top, the stronger the three-month performance. So, for example, business services—which employs more Georgians than any other single sector—is in the upper right-hand quadrant, indicating that it has been expanding on a year-over-year basis and has also been picking up speed over the three months ending in June. In fact, most sectors have been drifting toward the expanding territory recently, with the notable exception of employment in the federal government, which is still markedly contracting (though the number of federal government employees in the state actually grew in June for the first time since September 2012).
To show the state’s employment progress over time, the “snail trail” chart below tracks the movement of the state’s employment momentum since before the recession. Each point represents one month of data, with the path starting at the green dot in January 2007 and tracking to the most recent data point in blue. After spending a good deal of time contracting and expanding modestly, the state’s employment is on roughly a 2 percent path on both a 12-month and three-month basis and back near where it was in January 2007.
What’s more, manufacturing and construction—the two sectors that shrank the most (by a lot) during the recession—are both poised for progress.
Georgia, like other states in the Southeast, has proven to be well positioned to benefit from the changing landscape of global manufacturing. The state has seen several announcements of plans for new manufacturing facilities recently, drawing in manufacturers eager to seize on the Peach State’s relatively low energy costs and strong foundation of technical and logistical support. Though advanced manufacturing is very automated (read: doesn’t create as many jobs as in the past), the jobs that are created tend to pay relatively well, and the business investment and concentration of output stemming from these operations help to boost the local economy through other streams—building, transportation, maintenance, etc.
And construction isn’t just picking up on the commercial front; home building has also been on the upswing in the state. Permits for new residential construction were up more than 50 percent from the beginning of the year in May. And Atlanta Fed business contacts in the Southeast continue to report that home construction is picking up speed (see the chart).
All told, the state’s economy is still far from fully recovered, but the recent progress is certainly a welcome sign. So while the rain may be to blame for all the creepy-crawlers that are coming out, I, for one, am seeing some sun starting to peek through the clouds.
By Laurel Graefe, Atlanta Fed REIN director
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