By David Pendered
Everyone is looking for a breakout year for the economy. So much so that Georgia State University went ahead and said it probably won’t be so.
“Forecaster says odds are against 2014 being a breakout year for the economy,” is the headline that GSU put on its statement about the latest economic forecast by Rajeev Dhawan, of the school’s Economic Forecasting Center.
On Friday, the U.S. Commerce Department revised downward its estimate of quarterly growth at the end of 2013. The growth rate was dropped by 25 percent from initial estimates, from 3.2 percent growth to 2.4 percent. The revised estimate is the weakest quarter since the first quarter of 2013 and attributed to dwindling consumer spending, according to an AP report.
In case anyone missed Dhawan’s point, the second paragraph in the statement released Wednesday contained this quote from the economist:
- “’One factor makes me less than sanguine about strong growth in 2014: anemic capital expenditures in 2013,’” Dhawan writes in his Forecast of the Nation. With capital investment growing only 2.6 percent last year, “overall investment numbers for 2014 are looking less rosy than I would like.’”
This observation about the Georgia economy appears near the bottom of the statement:
- “Ultimately, 2014 will be a wait-and-see year for the state, according to Dhawan.”
Dhawan’s forecast for the nation is in line with the general outlook for the southeast region of the U.S., as it’s portrayed in the latest beige book from Atlanta’s Federal Reserve. The Atlanta district’s report portrayed the regional economy as muddling along.
This section on employment and prices, from the Atlanta report, doesn’t warm the heart:
- “Businesses did not indicate a significant pickup in hiring, nor did they report any staff reductions. Businesses continued to employ technology and utilized overtime and contract labor as an alternative to increasing permanent staff.
- “Contacts in manufacturing, construction, professional, and energy sectors report persistent difficulty in finding qualified workers. On balance, many firms expressed continued hesitancy caused by concerns about healthcare reform in terms of their overall hiring plans.”
Again, the sentiment outlined above was carried forward in Dhawan’s national forecast. According to the GSU statement:
- “In 2013 the economy created jobs at a 194,000 monthly pace,” [Dhawan] said. “On paper, this performance seems great. But, one-third of the jobs created were in retail trade and hospitality, sectors that consist mostly of low-paying jobs,” which is not the sort of job growth that will produce income growth.
Dhawan was unable to find much of a silver lining in the cloud surrounding the state’s job growth in 2013. Remember the statement had noted the low pay associated with jobs in the retail and hospitality sectors, then consider this quote:
- “If it wasn’t for the good growth performance of the retail and hospitality sectors, job growth in the second half of 2013 would have been abysmal,” Dhawan writes.
The report from Atlanta’s Federal Reserve portrays the region through the following observations:
- Real Estate and Construction: Brokers indicated growth in home sales had slowed. Builders were more positive than brokers. Commercial real estate is expected to improve, largely in apartment construction.
- Manufacturing and Transportation: Manufacturing activity was up slightly. Businesses are trimming inventory and purchasing agents wait longer for orders to be delivered.
- Banking and Finance: Mortgage loans were down, fueling competition among lenders for a dwindling number of customers seeking to refinance.
- Natural Resources and Agriculture: “Deep water oil exploration in the Gulf of Mexico picked up … Monthly prices paid to farmers for rice and soybeans were up; prices for beef and broilers remained unchanged; and prices for corn, cotton, and hogs were down. The most recent domestic crop production projections for soybeans, corn, and rice were unchanged. Cotton and orange projections were down, although cotton was only down slightly. Similarly, projections for domestic beef and pork production rose, while broiler production remained unchanged.”