Savannah’s long-term growth prospects are among the best in the nation, thanks to the city’s dual personality as both a major tourist attraction and deep-water port, the University of Georgia’s Robert Sumichrast told 650 business people gathered Thursday at the Westin Savannah Harbor.
The dean of UGA’s Terry College of Business also had good news for the state as a whole, a departure from his last several annual forecasts.
“Georgia’s economy is forecast to grow by a modest 2.1 percent in 2013; however, that is higher than the 1.8 percent growth forecast for the nation as a whole,” Sumichrast said, speaking at the Savannah Area Chamber of Commerce’s annual Economic Outlook luncheon.
The expectation of an economically healthier Georgia is due to a number of factors, he said, including the end of the housing bubble, which dealt the state an especially harsh blow, as well as a number large projects bringing jobs and investment in 2012.
“And Georgia has become even more competitive with the establishment of a $100 million deal-closing fund,” he added.
That said, Sumichrast cautioned that uncertainty at the federal level may leave many businesses without the confidence to expand or relocate this year.
“These growth projections are based on several key assumptions,” he said, including raising the debt ceiling, preventing sequestration and the Fed keeping interest rates low and inflation under control.
“If Congress doesn’t increase the debt ceiling, we could be back in a deep recession,” he said. “If sequestration is not replaced with reasonable spending cuts and tax increases, that could shave a half percentage point off the state’s GDP.”
Oil prices, too, could play a role.
“If oil prices should climb above $140 a barrel, that could also trigger a recession,” he said, adding that it’s unlikely to happen barring a major geopolitical crisis.
Savannah economist Michael Toma generally agreed with Sumichrast’s report, adding manufacturing growth into the mix of industries fueling the area’s comeback.
“Savannah’s Metropolitan Statistical Area is well-diversified, with a variety of pistons in its economic engine,” he told the sold-out audience.
Savannah’s MSA includes Chatham, Bryan and Effingham counties.
“The manufacturing sector was a source of growth in 2012,” said Toma, who heads the Center for Regional Analysis at Armstrong Atlantic State University and presents a quarterly Economic Monitor detailing the current and projected economic health of the region.
“Recent years’ announcements of facility expansions totaling more than $1 billion in capital investment and nearly 4,000 jobs are beginning to be realized in employment data.
“Approximately 1,000 manufacturing jobs have been added since mid-2010, with additional manufacturing growth expected this year.”
Although growth at Georgia Ports Authority slowed last year, the facility will still end 2012 handling more cargo than ever before for the third straight year, Toma said.
“Improvements in transportation linkages, technology, new service, strategic marketing and - most significant – the green light to deepen the Savannah Harbor will play a role in maintaining GPA’s position as a premier East Coast hub for containerized cargo,” he said.
The city’s healthy tourism industry grew steadily in 2012 and helped the regional economy down the road to economic recovery, Toma said.
Data available through late 2012 indicate gains of approximately 7 percent over the previous year, with activity expected to increase again in 2013.
The region’s health care sector increased employment by 3.8 percent last year, adding some 4,500 workers since 2005, Toma’s numbers show.
“Above-average growth in employment is expected to continue in 2013,” he said.
The region is home to 27,300 military personnel stationed at Fort Stewart and Hunter Army Airfield. The military facilities also provide jobs for more than 4,700 federal civilian employees. That number, while growing substantially in recent years, dropped slightly in 2012 as federal defense budget cutbacks took effect. Together, the payroll for military and civilian workers was $1.53 billion last year.
Finally, residential real estate development began to show promising signs of recovery in in 2012, with home sales up 11 percent year-over-year through November and building permit issuance up 15 percent in the first three quarters, Toma said.
“In all, 2012 was a decent year,” Toma said. “But the momentum taking us into 2013 is promising.
“I think what we’re seeing is a return to a more reasonable rate of growth as opposed to the unsustainable growth we experienced in the mid-2000s.”
SAVANNAH’S PROJECTIONS FOR 2013
Employment growth - l.5 percent
Unemployment rate – 7.5 percent
Personal income growth – 3.5 percent
Population growth – 2 percent