Published Wednesday, October 31, 2012
By W. WINSTON SKINNER
The West Georgia region is doing better than Georgia as a whole economically — and the region is seeing some unexpected employment gains, including in the construction field.
Those were among the conclusions shared by Dr. William "Joey" Smith, associate professor of economics at the University of West Georgia, at the 2012 Economic Forecast Breakfast on Tuesday. The annual breakfast was held at the Campus Center Ballroom on the UWG campus in Carrollton.
Smith, who has spoken to Coweta audiences about local and regional economic trends, shared the stage with John B. Jung Jr., chief operating officer at BB&T Capital Markets.
Smith shared a variety of statistics showing the region – currently defined as Coweta, Carroll, Douglas, Haralson and Paulding counties – "doing better" than a year ago, in some areas "a good bit better."
There have been "job gains in all five of our counties," and he noted the driver of that growth has been in the private sector, which he also saw as positive.
"The private sector has been leading us in job creation," Smith said. "The government is not into making jobs. They don't make stuff."
Jobs in the retail sector have been lagging behind other areas of the economy.
While news reports and headlines might lead area residents to think there is "no good news coming out of the housing market," that is not true, Smith said. "It's just not in new housing. It's in existing housing."
National, state and local unemployment numbers are slowly declining. Georgia, which had a stronger than the national level employment before the economic crash in 2007, has had higher unemployment "than the United States throughout the recession and the recovery," Smith stated.
While those unemployment numbers are declining, Smith said it will be "quite awhile" before the area, state or nation have unemployment at pre-recession levels.
With regard to initial unemployment claims in Georgia, Smith said the numbers are declining, but "not as fast as they have in the past" when there have been economic downturns. "It's going to take anywhere from 18 months to two years to return to pre-recession levels," he said.
The region's unemployment level is "way down from where we were at the peak of the recession," Smith said.
Smith said the leading economic indicators indicate where the economy is headed. Those have been up "for quite some time" but a bit shaky recently. He said the numbers rose the last couple of months but noted there have been some down months in the last six months.
"We're seeing a slowdown in that growth level," Smith said.
Still, there is economic recovery in the region. "You're anxious about whether the recovery has started locally. It's already started happening in the West Georgia region," he said.
Unemployment in the region is lower than the state figure. "For the first time in a long time, we're doing better than the state," Smith said.
He pointed to particular employment strength in Coweta, with similar trends in Carroll. The region is now "leading instead of lagging," according to Smith.
"The labor force has been rising recently. At the same time the West Georgia unemployment rate has been falling. When both of those are moving in those two different directions ... we're putting people back to work faster than we were before," Smith said. "This is a very good sign."
There has been job growth in every county in the region except Haralson. "Every single county in our region is moving in the right direction. We're putting people back to work at a faster and faster rate even when the labor force is growing," Smith said.
"Government jobs gave not started to come back the way they have in other parts of the economy," he said. While that may sound good to some people, Smith cautioned that many of those jobs are teachers, police officers and firefighters.
In most of the region's counties, the top employer is the local school system. The jobs created by schools are "solidly middle class jobs," Smith noted.
Coweta County added 673 private sector jobs in the past year – 124 in wholesaling and 154 in accommodations and food service.
Smith said 204 of Coweta's new jobs were through temporary services, which Smith said should not be seen in a negative light. When people get jobs through temp services, that "usually means they're moving to permanent" employment, Smith said.
Smith also noted the numbers do not include employees hired at Cancer Treatment Centers of America or at the new Piedmont Newnan Hospital. "This is good news," he said.
Smith noted the new construction jobs in the region – 103 in Douglas, 27 in Haralson and 53 Paulding in Paulding. The region lost a third of its construction jobs after the 2007 financial crisis. A new jail in Douglasville, and work at the UWG campus in Carrollton account for some of the new jobs.
The new construction jobs are "a little bit of a surprise," Smith said. "We're seeing construction come back. We're just not building houses."
Area manufacturing jobs took a hit in 2007 but since 2009 have been holding steady. Those jobs are helping the region move out of the economic slump.
"Medical services aren't recession proof, but what they are is recession resistant," Smith said. He said there was a loss of medical sector jobs several months into the recession as people lost jobs and insurance and "quit going to the doctor."
That situation has improved as more people have gone back to work – and resumed regular medical care. "We're predicting pretty swift growth in healthcare," he said. "Healthcare is actually going to surpass manufacturing in employment in our region."
Smith noted the fastpaced population growth predicted before the economic collapse has not materialized. Paulding – once tagged as one of the fastest growing counties in the nation – is not even the fastest growing county in the region. "It's Coweta County," Smith noted.
There has been a slight decline in Haralson County "over the past year," he said. "Population isn't where we thought it was going to be. It's starting to plateau. It's not growing like it was predicted to."
Per capita income is not growing either. In real dollar terms, it is probably declining, Smith said.
"The impact is going to be primarily felt in the housing market," Smith said. "The good news is we've hit bottom. The bad news is we've been there for four years."
He noted Carroll County's new housing starts for the past year are around 50, while a few years ago, there were 2,000 new homes some years.
Existing housing stock is moving – and selling for a better price than a year ago. "In every month we've seen pending sales up in our region. We're selling more houses now. Primarily, that's because there are lots of houses available at a good price," Smith said.
Many of the houses are being bought by investors. "That's how you clear the market," Smith said, noting the average number of days a house in the region stays on the market has dropped from 146 to 115 in a year's time.
Foreclosures are also down. Smith said Georgia allows for a fairly quick handling of foreclosed properties. At no point did the number of foreclosures in Georgia reach the point that it would take more than two years to process them.
In New York state, it is expected to take 50 years to process all the foreclosures.
Georgia's situation "allowed us to rip that Bandaid off quickly," Smith said. "We've seen lower foreclosure rates than this time last year." He added, however, that the region has a relatively high foreclosure rate in "a relatively high foreclosure state."
Still the top 10 counties for foreclosures in Georgia are now east of Atlanta.
"Foreclosures have caused a lot of problems in our area," Smith said, particularly in terms of bank closures. Several Georgia cities lost 2-5 banks. "Downtown Atlanta's actually lost about 10," he said.
Most of the banks that closed were community based banks which made lots of loans "to small businesses that drive the economy," Smith said.
"By definition they weren't too big to fail, and so that's what they did. They failed," Smith said. He said the region lost $6-7 billion in economic activity because of the bank closures.
Economists also look at tax receipt rates as an economic factor. Taxes "support local services," Smith said, and they are up – income taxes and sales taxes.
"We're up 4.3 percent over the year," Smith added. Motor fuel taxes are down because people are driving less.
He also noted state tax revenues are growing at a lower rate than they generally have. "We're going to face some tough decisions going forward," Smith said.
"In all we've been doing pretty well – particularly in comparison with last year and the year before that," Smith told the attendees. "You have a reason to smile. You can walk out of here this morning and not think we're doing bad."
About 380 people – including several from the banking and development sectors in Coweta County – attended the breakfast. Dr. Faye McIntyre, dean of UWG's Richards College of Business, said the attendance was "almost at a record" and praised the university staff who do "a terrific job of this every year."