Georgia’s Economic Might on Display in Race to Control Senate
(Bloomberg) -- As Republicans and Democrats battle over who will run Georgia’s economy the best, the state itself is an example of how government intervention in the wake of the Covid-19 crisis has aided its recovery.
Georgia’s economy has rebounded, and unemployment has dropped below the national average in the wake of more than $3 trillion in fiscal stimulus and the Federal Reserve cutting rates to near zero. That’s lifted the housing industry, fueling development in metro Atlanta and the U.S. carpet capital of Dalton, as well as auto manufacturing in the state. One weak spot, that none of the country escaped, has been tourism.
More stimulus could be on the way with $2,000 checks for Americans if Democratic candidates Raphael Warnock and Jon Ossoff win, President-elect Joe Biden pledged in a campaign stop Monday. Republicans David Perdue and Kelly Loeffler, by contrast, won support by President Donald Trump in a rally in Dalton, where unemployment has plunged to 5.2% from 20% in April.
“Georgia has more leverage than most states from the housing boom,” said Jeffrey Humphreys, director of economic forecasting at the University of Georgia’s Terry College of Business. “We are seeing a V-shaped recovery in housing and vehicles. That is working to Georgia’s advantage.”
Meanwhile, the results of the Senate race on Tuesday also could determine the near-term direction of the U.S. economy. If Democrats gain control of the upper chamber and Congress quickly passes $2,000 stimulus checks, it would add 1.1 percentage points per quarter on annualized growth in 2021, according to Bloomberg economists.
Here are some ways that economists cite that Georgia’s economy is doing well compared to much of the U.S.
“The Georgia economy is weathering the pandemic better than most other states,” said Mark Zandi, chief economist at Moody’s Analytics. “Employment through November is down 3% from the pre-pandemic peak, which is less than half the over 6% drop in employment nationwide. Georgia’s unemployment rate at 5.7% is a full percentage point below the nation’s.”
“The Georgia economy is doing relatively well, particularly Northern Georgia,” said Mark Vitner, senior economist at Wells Fargo & Co. “The floor coverings business -- which used to be carpets but now includes hardwoods and laminates too -- is doing extremely well. The poultry industry is doing well and the state continues to attract new industry. Economic development was fairly strong this past year.”
“The state is less urban than the rest of the country, Atlanta notwithstanding, which has mitigated the economic fallout of the virus,” according to Zandi. “The state is also likely benefiting from the work-from-anywhere phenomena, as it attracts migrants from big urban areas in the Northeast and Midwest due its lower living costs and the allure of its resort towns on the coast.”
“State and local governments in Georgia face less daunting fiscal challenges than in many other states. So state and local government is not the headwind to growth here that it will be in a lot of other states,” said Humphreys.
©2021 Bloomberg L.P.