Unlike many CSRA employers, Lane Keen’s business hasn’t experienced a labor shortage.
Keen – owner of Keen Signs & Graphics, recently moved his business from Reynolds Street to a much larger location at 1467 Broad St. “We have low turnover,” he says. Keen was one of about 100 attendees at the 2021 Economic Outlook Breakfast, which was held on Thursday, Dec. 9 in Augusta University’s Jaguar Student Activities Center Ballroom. The presenter for this event was Dr. Simon Medcalfe – Professor of Economics with the university’s James M. Hull College of Business and a weekly contributor to ABD. “You have to know what’s going on to create a business plan,” Keen states.
Medcalfe says job losses, rising inflation, and the pandemic have put a damper on the local economy, but his overall outlook for 2022 isn’t as optimistic as many had hoped it would be. Here are the topics he discussed.
One of the primary economic concerns nationwide is inflation. “The price of everything has gone up,” which includes food and cars, he explains. Medcalfe says inflation is 6.2% nationally, but in the South, it’s slightly higher at 6.6%. In Augusta, the situation is even more bleak. Wages in this area have declined by 2%, which means combined with inflation, “The average person in Augusta has had a pay cut of 8%,” Medcalfe add. He predicts inflation will continue to plague both the U.S. and local economy in 2022 and beyond. “This is not a transitory issue,” Medcalfe states.
Jordan Pierce – Market President for First Community Bank in Augusta, also attended the breakfast. “It’s a mixed forecast, says Pierce. “There are good things,” such as the jobs recovery, but there are also negatives, such as inflation.
In his presentation, he discussed three industries that were profoundly affected by job losses and COVID-19: leisure and hospitality, retail, and healthcare. Medcalfe explains the Augusta Metropolitan Statistical Area lost 12,000 hospitality jobs last year and has regained about 9,000 of those jobs. He says the leisure and hospitality industry endured the greatest impact from the pandemic. It also strongly affected the retail industry as many businesses closed either temporarily or permanently, but 2021 has been a better year for retailers. “Retail bounced back,” Medcalfe states. “Nationally, retail spending is high,” thanks to stimulus payments from the U.S. government. In the Augusta MSA, the number of retail workers rose from 24,000 in May 2020 to about 29,000 in September 2021. That was also the case for the local healthcare industry, which lost jobs during the height of the pandemic, but has regained many of those jobs.
Medcalfe says local employment numbers are lower than they were prior to the pandemic. In May 2020, the number of employed people in the MSA was about 215,000. That number increased to nearly 240,000 in January 2021, but it has remained nearly constant throughout this year. There has been “no increase in employment,” he adds. “It’s flatlined.” Medcalfe contrasted local employment numbers with those of Savannah, where the number of workers has increased by 13,000 people and wages have increased by 8%.
He and his students researched the Savannah River Site, which had a $2 billion impact on the local economy in 2020 due, in part, to plant employees spending money at other businesses. According to Stuart MacVean – President and Chief Executive Officer of Savannah River Nuclear Solutions, his company plans to launch a new plutonium processing plant at SRS, which will create 1,200 jobs in the next few years.
Until then, Dr. Medcalfe says we may be in for rough waters.
“The outlook is not rosy,” states Medcalfe. “There are definitely concerns going into the New Year.”