Loyal readers will have read Josh Heath’s excellent report on my presentation last week, but if you were unable to attend the economic forecast breakfast last week, here are some additional highlights.
In 2021, Augusta compared poorly to other Metropolitan Statistical Areas (MSA) in Georgia. Employment in Augusta remains 2.6% below the pre-pandemic levels of March, 2020. Three MSAs have higher employment levels than March, 2020: Savannah, Valdosta, and Warner Robins. As Josh mentioned, one sector that is doing well is retail; employment locally is at a record high of over 29,000 workers. With excess savings of $2 trillion nationally, retail sales may remain strong through early 2022.
Looking at a broader measure of the labor market, including earnings, unemployment, labor force, and hours worked, shows Savannah as the most robust labor market. Strong labor markets are also seen in Atlanta, Brunswick, Dalton, and Gainesville. However, all MSAs (except Gainesville) saw weakening labor markets in October relative to September . It is hard to make forecasts based on one month’s data, but there are other economic concerns heading into 2022.
Inflation is much higher than the Federal Reserve’s target and there is more concern now that this is not as transitory as first thought. Data released on Friday, after my presentation, reported inflation at 6.8% nationally and 7.2% in the South Census region. I expect the Fed to announce, this week, a speeding up of it tapering off bond buying, to allow interest rate increases earlier in 2022 than previously expected. Moreover, this inflation is destroying the purchasing power of local wages, which have not kept pace with national averages or cities such as Savannah and Gainesville. A lack of competitive wage will make it difficult to attract workers.
Finally, almost two years into the pandemic, COVID-19 still spreads economic uncertainty. New variants such as Omicron deter travel and other leisure spending and make some workers reluctant to re-enter the workforce.
Refreshing to have a credible non-political driven news-type feature on the economy.
Thanks Tom– we are lucky to have Dr. Medcalfe share his insights every Wednesday