Teresa Williams
THOMASVILLE — Recovery from the recent recession will be bumpy but sustained in 2010, according to an economic forecaster that paid a visit to Thomasville Tuesday.
A full house was in attendance at The Plaza to hear the “2010 Economic Forecast,” presented by Dr. Jeffrey M. Humphreys, director of the Selig Center for Economic Growth at the University of Georgia’s Terry College of Business.
“To sum it up, even though this recovery will be bumpy and much bumpier than usual due to federal programs coming in and out, it will be sustained,” he said. “Recovery should begin this spring in terms of jobs.”
Humphreys cited declining employment, hurting non-residential property markets, a still healing banking and financial system, and “very, very restrained” consumer spending as concerns but still predicted an incoming light at the end of the tunnel.
“Despite this list of concerns, I think this recovery will be sustained and we will not double dip or slide back into recession,” he said.
There have been two quarters of “positive growth,” but Humphreys stressed recovery will be a slow process.
“In the two previous tough recessions, it took the U.S. economy only about three quarters to fully recover,” he said. “This upturn looks to be different.”
Humphreys believes this will be “the most subdued recovery in consumer spending since World War II” and thinks it will take “about six quarters to fully recover.”
Job recovery will take even longer, he predicted.
“I think it will take three additional years before the labor market can recover the jobs that were lost,” Humphreys said. “I don’t think this will be fully healed until the nation replaces the 8.5 million jobs lost.”
On the state level, Humphreys predicts the road to recovery will continue to be “bumpy.”
“I do expect to grow about 1.6 percent in gross domestic product, which is a lot better than the decline experienced last year,” he said.
In the past, Georgia has outperformed the national average, but Humphreys does not expect that this year because the state was hit harder in some areas.
He said the biggest problem for Georgia is its “heavy exposure to real estate downturn,” at the epicenter of this recession, particularly in non-residential sectors and stemming from its “over dependence” on new development, which also further exposed and hurt the financial sector.
The current number of Georgia jobs lost in the recession is 350,000, Humphreys said.
“That is a huge number, 8.4 percent, for our state, more than twice that lost in the last recession,” he said.
The economist suggested those looking for a job today try markets including health care, defense and federal government.
Later in the year, he predicted private education, retail and hospitality jobs may increase. He does not expect new construction and state/local government jobs to be available in the next year due to spending declines.
Consumer spending is weak, Humphreys said, and without it, the economy cannot fully recover. He does expect it to increase by at least 1.5 percent on the national level but it will not lead the recovery effort.
The economist predicted the dramatic increase in savings — one percent to 4.6 percent — to continue to rise but at a slower rate as consumers begin spending a little more.
He also said, though real estate prices stabilized in third quarter 2009, Georgia’s homes are “significantly undervalued” and in abundance right now.
The state is expected to do better in relocations and expansions.
“The recession has done nothing to reduce Georgia’s competitiveness in terms of recruiting new companies or making sure expansions take place here rather than somewhere else,” Humphreys said.
Larry Plank of New Hire Solutions, an employment staffing agency, attended last year’s forecast and returned to hear this one.
“What he said in reference to our industry last year was right on target,” Plank said, mentioning an increase in traffic.
He was not surprised by the news of a slow recovery.
“I expected to hear about slow growth and I agree it will be slow,” Plank said.
An economic forecast is annually presented by the local chamber of commerce in conjunction with UGA.
