The State of Georgia's economy is expected to continue growing in 2024, but at a slower pace than in 2023, according to a new report from the University of Georgia.
UGA's Selig Center for Economic Growth, which is a part of the Terry College of Business, held its annual Georgia Economic Outlook Monday at the Georgia Aquarium. The University said Georgia's GDP is expected to increase by 1.1% in 2024, down from 3% in 2023. However, the state is expected to continue to outpace the national GDP growth rate, which forecasters project to be 0.8% in 2024.
“Georgia is well positioned to weather an economic slowdown and our economy will outperform the U.S. economy,” Terry College of Business Dean Ben Ayers told the crowd gathered at Atlanta’s Georgia Aquarium for the kickoff of the 2024 Georgia Economic Outlook series. “The build-out of many large projects in the economic development pipeline and favorable demographics are the main reasons why Georgia will fare better than the nation.”
Ayers said there is about a 33% probability that Georgia will slip into a recession in 2024, compared to around 50% across the U.S. The number of jobs will rise by 0.7% in 2024, which is slower compared to the 2.3% gain estimated for Georgia in 2023 but higher than the national job growth rate of 0.3%.
Consumer spending and household balance sheets remained strong during 2023, fueling economic expansion in Georgia and the nation.
"Consumers still have about $1.8 trillion of the $2.6 trillion in excess savings accumulated during the pandemic," the announcement from UGA said. "This financial cushion means consumer spending is unlikely to decline in 2024."
The report also said many businesses avoided layoffs despite the fear of a coming recession or tightening credit. The strong labor market and lack of job losses helped maintain consumer spending and stave off recession.
“Despite aggressive rate hikes and relatively higher risk of recession, employers have continued to hire. How do we account for this resilience, and what does it imply for 2024? In the wake of the pandemic, employers struggled to reload their workforces,” Ayers said. “These hiring difficulties and widespread recognition that the labor market will be tight over the next decade have caused many employers to keep hiring even as interest rates soared, and sales slowed.”
Economists predict Georgia's unemployment rate will only hit 4% in 2024 compared to the 3.4% average in 2023.
Additionally, inflation is expected to dip to 2.5% in the second half of 2024.
“We expect no additional interest rate hikes by the Federal Reserve, but inflation-adjusted interest rates will rise as inflation declines,” Ayers said. “This ‘passive’ tightening and other stresses in the financial system will slow growth, but the economy will not bust.
“Despite slower GDP growth, we expect the labor market to remain strong enough to stave off an actual recession, but the economy will be vulnerable to something else going wrong.”
The University said continued conflict in the Middle East and Ukraine, potential stock market disruptions, further labor unrest or government shutdown are risks threatening the growth of Georgia's economy, but are not expected to be enough to trigger a recession.
“In terms of economic severity, the main risks are federal reserve missteps, a financial crisis, and an energy price spike,” Ayers said. “Each of these risks alone could trigger a recession.”
Economists do not expect the Federal Reserve to raise interest rates any further. However, it may sell off some of its mortgage-backed securities and treasury bonds supply too quickly, driving market interest rates too high and triggering a recession.
Additionally, a high-risk factor is the banking sector's health, especially concerning commercial real estate mortgages. A decline in commercial real estate values - tied to the post-COVID restructuring of American offices - could lead commercial mortgages to default and leave some banks insolvement.
For more information about the 2024 Georgia Economic Outlook or a detailed economic forecast for specific Georgia MSAs, visit terry.uga.edu/selig or attend an upcoming 2024 Georgia Economic Outlook luncheon. UGA economists will deliver Georgia Economic Outlook programs in Athens, Albany, Augusta, Columbus, Jekyll Island, Macon and Savannah throughout January and February.
