Monday, January 8, 2001
Holbrook elected to board of AAAS
University begins $4.4 million expansion of food science building
Slowdown starting to hit home
By David Dodson
ddodson@terry.uga.edu

For the past two years, the Selig Center for Economic Growth has correctly predicted a gradual slowing of the state’s booming economy. This year, the Terry College forecasters anticipate even slower growth--but probably not a recession. However, they cautioned that the oncoming slowdown “will look and feel very differently” from the past 24 months.
With many dot-coms in a financial tailspin, retail sales in retreat and less wiggle room to avoid recession, consumers can sense the nation’s economic engine decelerating. “How are we going to feel the brakes being applied?” Terry College Dean P. George Benson asked the audience at the college’s 18th annual Georgia Economic Outlook luncheon. “Raises and bonuses will be smaller. Many companies will see their sales inching forward rather than surging ahead. Corporate budgets will get tighter.”
“You may escape unscathed,” he told the nearly 1,000 executives and government leaders attending the Dec. 6 luncheon in Atlanta, “but your neighbor may not.”
According to the Selig Center forecast, the Georgia economy will experience a significant drop in personal income growth as well as gross state product, the broadest measure of economic growth.
“It took two years for Georgia’s gross state product to fall just 0.7 percentage points--down to a growth rate of 6.1 percent for the year just ended,” Benson says. “But over the next 12 months, we expect the growth rate to drop another 1.2 percentage points to 4.9 percent.”
Selig Center Director Jeffrey Humphreys produced the Terry College’s annual economic forecast. The forecast booklet is available for purchase by calling 542-4085 or on the Web at www.selig.uga.edu. The following are some of the key predictions from the Selig Center forecast.
• Personal income in Georgia will expand 6.4 percent in 2001, before adjusting for inflation. That’s down from last year’s estimated increase of 7.5 percent and the peak growth rate of 8.6 percent in 1998.
• Job growth in Georgia is expected to slip for the third consecutive year. Non-farm employment was on pace to grow 3 percent in 2000, following growth of 4 percent in 1999. In 2001, state employment is forecast to grow 2.3 percent--or about 90,000 new jobs statewide. The projection for U.S. job growth is 1.2 percent. The jobless rate in Georgia will hold steady at 3.6 percent in 2001. Nationwide, unemployment will creep up, from 4.1 percent in 2000 to 4.4 percent this year.
• The Selig Center places the odds of recession in 2001 at one in three. The leading risks are an oil-induced recession if prices spike up to $40 a barrel or more and stay there from their current level of about $30, or if the Federal Reserve hikes interest rates to stop an oil-led inflationary spiral.
• Georgia’s annual rate of population growth will be about double that of the nation and will continue to grow faster than any state outside of the Rocky Mountain region. By July, the state will have 8.1 million residents, a one-year increase of 126,300. Four counties around Atlanta and one rural Georgia county now rank among the nation’s 10 fastest-growing counties in population (Forsyth, 2nd; Henry, 5th; Paulding, 7th; Echols, 9th; and Walton, 10th).
• Calling 2000 a breakthrough year for biotechnology in the state, the Selig Center has identified 76 biotech firms in Georgia, employing nearly 8,000 workers. Business Facilities magazine ranked Georgia’s biotech industry as the fifth fastest-growing in the nation. “The next frontier in gene research lies at the crossroads of genetics, mathematical modeling and computer science,” Benson says. “Computer applications in genetic research, called bioinformatics, are likely to skyrocket in the near future, and Georgia is well-positioned to lead in this area.”
• The consumer price index bottomed out in 1998 at 1.6 percent and rose to 2.2 percent in 1999 and 3.4 percent in 2000, partly due to higher energy prices. If oil prices behave as expected, the CPI will settle at 2.7 percent in 2001, according to the Selig Center.
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