University of Georgia forecasters delivered a familiar message in the university’s annual economic outlook presentation in Athens on Jan. 31: Although economic growth will slow in 2024, Georgia will outpace the national average, and Athens will outpace the state average.
Georgia economic growth will slow to about 1.1%, down from last year’s 3% but better than the projected national average of 0.8%, while growth in the Athens area will be slightly higher, predicted Ben Ayers, dean of UGA’s Terry College of Business.
“We’ve got a good forecast. It’s not a great forecast,” with only about a one in three chance of recession this year, Ayers told a crowd at the Classic Center.
Job growth will be higher in Georgia than in the U.S. overall, but unemployment in the state will rise slightly from 3.4% to about 4%, Ayers said, with U.S. unemployment reaching 4.2%.
People still retain much of the savings they built up during the recession, and because of a tight labor market that will last for “decades,” companies are “working hard to avoid layoffs,” Ayers said. “Most households are in a good position to take on additional credit,” and inflation could ease to 2.5% in the second half of the year, he said. Supply chain issues have eased; auto dealers now have cars to sell, he added. And the buildout of a number of huge development projects around the state will help Georgia outperform the national economy.
Athens is somewhat insulated from the ups and downs of sectors such as manufacturing and transportation because of the outsized roles health care and state funding (including UGA) play in Athens’ economy, said Jeff Humphreys, director of the business college’s Selig Center for Economic Growth. But that dependence on state funding also poses a risk for the local economy in the event of state budget cuts, but the outlook is good for Athens, he said.
“We expect to see faster job growth locally because Athens has been remarkably successful in landing private-sector economic development projects,” said Humphreys, who delivered the Athens-area part of the forecast.
Those projects are also diversifying Athens’ economy, he said. Among those new projects are a Meissner manufacturing and research facility that promises to bring more than 1,700 jobs, two successful biotech companies that grew out of UGA research that are expanding by about 250 jobs combined, and a pharmaceutical company’s 55-job expansion, Humphreys said.
Athens’ hospitality industry is “also doing quite well,” he said. A 5,500-seat arena under construction at the Classic Center will add an estimated $33 million a year to the local economy, he said. And the end of the Hollywood actors and writers strikes means Athens’ film industry can resume being a local economic driver, he said.
The local economy does face some challenges to growth, however, Humphreys said. The cost of living in Athens has now reached 97% of the U.S. average, while the cost in Atlanta is now 105% of the national average, Humphreys said. That means Athens becomes relatively less attractive on that metric than other desirable and less costly Georgia locales such as Brunswick.
The high cost of living could also slow the immigration of retirees and creatives here, he said. Since the pandemic, Athens house prices have risen 61%.
“The housing market is quite overvalued,” and vacancy rates are very low, he said, noting the pressure UGA’s continued growth—more than 1,000 new students this year—puts on Athens’ housing stock. Housing is very tight, with a vacancy rate of just 4%, he said.
“UGA does not have enough on-campus housing for our growing student population,” he said. As a result, Athens has an “amazingly high” rate of renter-occupied housing—43%, up “significantly” from 41% a year earlier and one of the highest rates of any U.S. city, he said.
“By any kind of traditional metric, we have a substantially overpriced housing market in Athens,” he said. That’s not likely to change much because of high demand and “scant listings of homes for sale,” he said. “It will take some time for incomes to rise enough to match.”
But Athens’ recent success in attracting development implies that the city remains positioned to compete effectively for more such projects, Humphreys said.
Housing prices have also risen sharply nationwide, and a possible decline in housing costs is more likely to be moderate than severe, Ayers said.
At the national level, a number of risks could also threaten this year’s expected moderate growth, Ayers said. Some of the major risks, the dean said, include a possible banking crisis, a collapse in stock and/or housing prices, an energy price shock, broader military conflicts and missteps by the Federal Reserve, which last Wednesday kept its benchmark interest rate at a 23-year high as it seeks to lower inflation to 2% or less. The inflation rate was 3.4% for the 12 months preceding December, the latest month for which data is available.
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