ATLANTA – Georgia’s economy will enter a mild, short recession early next year that should only persist for about six months, the dean of the University of Georgia’s Terry College of Business said Friday.
The downturn will be prompted by the series of interest rate hikes the Federal Reserve board has ordered this year to curb inflation, rising energy prices brought on by the war in Ukraine and hits to personal wealth including a down stock market, Ben Ayers told a luncheon audience at the Georgia Aquarium in downtown Atlanta.
Georgia, however, is better positioned than other states to weather the recession because of its strong labor market and several major economic development projects that will pour investment into the state and create jobs, Ayers said.
As a result, Georgia’s Gross Domestic Product is only likely to experience a “slight dip” of 0.2%, less than the national average, he said.
“We will continue to outperform the nation,” he said. “Growth will slow, but growth will not stop.”
Ayers said the state’s labor market should remain strong, adding jobs in health care, education, tourism, and government.
“Employers will be slow to lay off workers,” he said.
But Ayers warned losses are likely in some job sectors, including construction, finance, and manufacturing.
Ayers said housing in Georgia will suffer more than other economic sectors, with housing construction slowing significantly due to higher mortgage interest rates. Prices of existing housing are expected to decline by 12% next year, he said.
The good news, Ayers said, is that the housing market isn’t expected to crash to the extent it did during the Great Recession of the late 2000s.
“We do not expect a repeat of the housing bust,” he said.
Ayers said an economic recovery is likely to begin late next year. For one thing, the Fed probably will begin phasing out interest rate hikes in 2023 as inflation tapers off, he said.
Housing should rebound quickly once the Fed stops raising interest rates. Ayers said the increasing number of Georgians now working from home will boost interest in home construction.
Nationally, low- and middle-income families will be hit hardest by the recession, said Mark Vitner, founder and chief economist at North Carolina-based Piedmont Crescent Capital. Those income groups will have a particularly difficult time coping with higher food, energy, and rent costs, Vitner said.
“For half of the country, the inflation rate is essentially doubled, 18% to 20%,” he said. “Real purchasing power has been wiped out.”
While Vitner held out hope the U.S. economy will experience a soft landing from the coming recession, he said it’s more likely there will be a series of “rolling recessions” such as persisted during the 1980s.
Vitner said the only solution to the recession lies in getting inflation down. Still, he agreed with Ayers that the coming downturn won’t be as steep as the Great Recession. He said the approaching recession likely will be followed by slow growth during the next two to three years.
“This is going to be a challenging economic environment in the coming year,” Vitner said. “Recessions aren’t fun. … [But] they’re the exception, not the rule.”
This story is available through a news partnership with Capitol Beat News Service, a project of the Georgia Press Educational Foundation.
ATLANTA – Georgia tax collections suffered a rare but slight decline last month, the state Department of Revenue reported Friday.
The state brought in almost $2.29 billion in tax receipts in November, down $2.4 million – or just 0.1% – from November of last year. November marked the first month in more than a year that tax revenues have gone down, as steady increases have allowed the state to build a $6.6 billion budget surplus.
The largest sources of tax revenue actually increased last month. Individual income taxes rose 4.6% over November of last year, as tax refunds issued by the revenue agency fell 23.2%.
Net sales taxes were up 9.8%, while typically volatile corporate income taxes jumped by 358.1%, as payments increased and refunds decreased.
The slight drop in overall tax collections despite the rise of revenue in various key categories can be attributed to the ongoing suspension of Georgia’s sales tax on gasoline and other motor fuels. As a result, motor fuels tax revenues fell by 99.4% in November compared to the same month a year ago.
That won’t continue to be the case for long. With pump prices continuing to drop, Gov. Brian Kemp announced Thursday that the gas tax suspension will be lifted after Jan. 10.
Instead, the governor said he will ask the General Assembly this winter to use part of the bulging surplus to provide an additional $1 billion in income tax relief for Georgians on top of the tax rebate the legislature approved this year.
Kemp also plans to propose a $1 billion reduction in property taxes at the local level.
ATLANTA – Gov. Brian Kemp signed an executive order Thursday suspending the state sales tax on gasoline for the seventh and final time since March, when pump prices began climbing after the outbreak of war in Ukraine.
The latest suspension will run through Jan. 10, the day after Georgia lawmakers convene under the Gold Dome for the 2023 General Assembly session. After that, Kemp will look to the legislature to help provide tax relief to Georgians in other ways, the governor said during a news conference at the state Capitol.
“We can’t continue to do what we’re doing with gas taxes,” Kemp said. “This was always intended as a short-term answer.”
Kemp, who was reelected to a second term in office last month, repeated a pledge he made on the campaign trail this year to push for an additional $1 billion state income tax rebate on top of the $1.6 billion tax rebate Georgia lawmakers approved this year. He also is asking the legislature for $1 billion in property tax rebates.
Incoming Republican legislative leaders appeared with Kemp Thursday to lend support to his tax cutting proposals.
“Georgians deserve to keep as much of their hard-earned money as possible,” said House Majority Leader Jon Burns, R-Newington, the House Republican Caucus’ nominee to succeed the late David Ralston as speaker of the House. “It’s not our money.”
Providing additional tax relief shouldn’t be a heavy lift for the General Assembly. The state is sitting on top of a $6.6 billion budget surplus, which will make deciding what to do with tax dollars a lot easier.
In confirming he was suspending the gas tax for the last time, Kemp noted that pump prices have been falling. The average price of a gallon of regular unleaded gas in Georgia currently is $2.93 per gallon, according to AAA, down from $3.13 a month ago and well below this year’s peak price of $4.50 per gallon in mid-June.
This story is available through a news partnership with Capitol Beat News Service, a project of the Georgia Press Educational Foundation.
ATLANTA – The new Hyundai electric vehicles plant being built near Savannah will partner with a key supplier on the other side of the state.
Hyundai Motor Group (HMG) and SK On have selected a site in Bartow County for a new EV battery manufacturing facility to supply Hyundai’s EV plants across the country, Gov. Brian Kemp announced Thursday.
The battery plant will create more than 3,500 new jobs through an investment of $4 billion to $5 billion.
“Hyundai Motor Group and SK On are valued partners and key players in our state’s ever-growing automotive industry,” Kemp said. “Since day one, my administration has been focused on bringing jobs and opportunity to communities across the state that may have been overlooked in the past. SK and HMG share this goal.”
SK On was established just last year as the lithium-ion battery subsidiary of SK Innovation, South Korea’s largest energy company, which currently employs more than 2,000 Georgians at a battery plant in Commerce. The new facility in Bartow County is expected to begin operations in 2025.
Not counting Thursday’s announcement, EV-related projects in Georgia since 2020 total about $17 billion in investment and account for more than 22,800 new jobs.
“We’re creating a fully integrated supply chain for automotive [manufacturers] while also connecting battery manufacturers with recyclers to close the loop on battery manufacturing,” Georgia Commissioner of Economic Development Pat Wilson said. “We’re excited for the jobs of the future this will create for Bartow County and Northwest Georgia.”
The state Department of Economic Development’s Global Commerce Team worked in partnership with Georgia EMC, the Development Authority of Bartow County, the Cartersville-Bartow County Department of Economic Development, and the Technical College System of Georgia’s Quick Start program to land the project.
The huge Hyundai EV plant being built near Savannah in Bryan County is the largest economic development project in Georgia history, a $5.5 billion investment expected to create 8,100 jobs when fully built out.
This story is available through a news partnership with Capitol Beat News Service, a project of the Georgia Press Educational Foundation.
ATLANTA – The Biden administration is expressing concern about a proposed titanium mine near the Okefenokee Swamp.
Interior Secretary Deb Haaland is urging the state not to approve permits being sought by Alabama-based Twin Pines Minerals (TPM) to mine a 1,042-acre site in Charlton County near the southeastern edge of the largest black water swamp in North America.
“The department has a profound interest in protecting the health and integrity of the swamp ecosystem,” Haaland wrote late last month in a letter to Gov. Brian Kemp. “It is a unique wetland ecosystem unlike any other found in North America and is one of the world’s most hydrologically intact freshwater ecosystems.”
Haaland, who visited the Okefenokee National Wildlife Refuge in September, also noted the Okefenokee is part of the Muscogee (Creek) Nation’s ancestral homeland and, thus, has cultural value that could be affected by a mine. Haaland is the first Native American to serve as a cabinet secretary.
The refuge is the 16th most visited in the nation, with more than 400,000 visitors per year, she wrote.
Josh Marks, a lawyer and longtime advocate for protecting the swamp, said Haaland is the second interior secretary who has spoken out against mining near the Okefenokee.
“[Secretary Bruce] Babbitt did the same thing 25 years ago in opposing DuPont’s Okefenokee proposal,” Marks said. “Hopefully, Governor Kemp will listen to her, just as Governor Zell Miller listened to Secretary Babbitt, and say no to TPM.”
The project’s opponents filed a lawsuit last month challenging a decision by the U.S. Army Corps of Engineers to turn jurisdiction over permits for the mine to the state.
The Corps had suspended the Georgia Environmental Protection Division’s (EPD) review of the proposed mine last June. But the agency later agreed in an out-of-court settlement with Twin Pines to step aside and let the EPD resume its consideration of the permits.
Twin Pines officials say the mine does not threaten the environment, noting the proposed site for the project is three miles from the southeast corner of the Okefenokee at its closest point and 11 miles from the nearest canoe trail used by visitors.
The company also maintains the land will be restored to its original contours and native vegetation after mining activity is completed.
Kemp has not taken a position on the project.
This story is available through a news partnership with Capitol Beat News Service, a project of the Georgia Press Educational Foundation.
