GSU economist expects downturn in Georgia as Trump tariffs slow export sector

By David Pendered

In his first forecast after Donald Trump’s election, Georgia State University economist Rajeev Dhawan predicted Wednesday that Georgia’s export economy will slow as the president enacts tariffs.

Krog Street jogger, Oct. 11:2016

Atlanta’s back-to-the-city movement could be slowed by tariffs President Trump is expected to impose. File/Credit: David Pendered

The trickle down effect of tariffs will slow home purchases in metro Atlanta’s core counties and vehicular sales, Dhawan predicted.

A U.S. president has “ample precedent and scope” to unilaterally raise tariffs and any effort to block such actions, in court or by amending existing statutes, would be “difficult and time consuming,” according to a briefing paper released in September by the non-partisan Peterson Institute for International Economics.

“What sets Trump apart from others is his view on trade deficits, in that they are bad, period,” Dhawan said. “And his solution is to impose tariffs, which he can do unilaterally because the Trade Act of 1974 gives him fast-track authority to place tariffs for up to 150 days without congressional approval.”

According to Dhawan, the economic downturn to result from tariffs will cause Georgia’s employment growth to continue to swoon until 2018. Folks who can’t find work in the corporate sector will move to the lower-paid service industry.

The tariffs would cause a sharp rise in the dollar index, Dhawan predicted. That will produce a steep climb in bond and mortgage rates that will affect the housing and auto markets, he said.

Brunswick+auto+processing

Vehicles comprise a significant amount of trade through Georgia’s ports. Colonel’s Island Terminal at the Port of Brunswick, Ga., handled 621,943 units of roll-on/roll-off cargo in fiscal year 2016. The Georgia Ports Authority moved another 41,323 vehicles through the Port of Savannah in FY2016, which ended June 30. Credit: Georgia Ports Authority / Jim Carswell

“Consumers’ retirement portfolios, the only liquid option they have these days, would take a nasty hit, forcing them to pull back further on big ticket spending,” Dhawan said.

Dhawan expects the “tariff drama” to end in 2018, he said in his keynote remarks during the Georgia State University Economic Forecasting Conference. Dhawan is the center’s director.

Meanwhile, the back-to-the-city movement that has fueled population growth in the city of Atlanta in recent years will slow, Dhawan predicted, as buyers seek less-costly homes outside the urban core.

“We will see a shift in home sales from the core counties of the metro area toward the outer regions, as higher interest rates force those who can still qualify for a mortgage into cheaper areas,” Dhawan said.

Dhawan predicted the state will add 54,300 jobs in 2017, down more than 32,000 jobs from the 86,700 jobs he expects to be created in 2016. He predicts 72,200 jobs to be created in Georgia in 2018, after the tariff situation ends.

The impact of tariffs Trump is expected to impose will cover much of the state’s economy, Dhawan said.

Rajeev Dhawan

Rajeev Dhawan

“The main sectors to feel the pinch will be manufacturing and corporate, specifically large companies with international ties,” Dhawan said in a statement.

“The government sector will remain basically the same, due to the need for local government spending,” Dhawan said. “Other service sectors will improve because those who cannot find work in, say, the corporate sector, will find temporary employment as your Uber driver or pizza-delivery person. This shift from higher-income positions to lower-earning ones will result in somewhat less stellar personal income growth in 2017 and 2018, after 5.0 percent growth in 2016.”

Here are the center’s highlights for Georgia and Atlanta:

  • “Georgia employment will gain 86,700 jobs (15,300 premium jobs) in calendar year 2016, 54,300 jobs (9,600 premium) in 2017 and 72,200 (13,400 premium) in 2018.
  • “Nominal personal income will increase 5.0 percent in 2016, followed by only 4.7 percent in 2017, and a better 5.1% in 2018.
  • “Atlanta will add 62,800 jobs (11,800 premium jobs) in calendar year 2016, 39,100 jobs (7,700 premium) in 2017 and 50,400 jobs (10,300 premium) in 2018.
  • “Atlanta permitting activity in 2016 will increase 17.8 percent, drop by 12.7 percent in 2017 and fall slightly in 2018.”

 

David Pendered, Managing Editor, is an Atlanta journalist with more than 30 years experience reporting on the region’s urban affairs, from Atlanta City Hall to the state Capitol. Since 2008, he has written for print and digital publications, and advised on media and governmental affairs. Previously, he spent more than 26 years with The Atlanta Journal-Constitution and won awards for his coverage of schools and urban development. David graduated from North Carolina State University and was a Western Knight Center Fellow. David was born in Pennsylvania, grew up in North Carolina and is married to a fifth-generation Atlantan.

2 replies
  1. tesul98 says:

    So the candidate to improve the economy will create ways to slow the economy. Big surprise! To all the dummies who voted for this idiot, you will see the stupidity of your vote.Report

    Reply

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