Columbus Economic Forecast from UGA Terry College of Business
Economist Jeff Humphreys delivered the good news first at a luncheon held Friday in Columbus. The local metro area performed slightly better in 2015 than even he expected, creating about 1,800 jobs.
But 2016 looks to be a tough year for the area, with Columbus the only city in the state expected to lose jobs, said the director of the Selig Center for Economic Growth at the University of Georgia. In fact, Humphreys and the military itself are projecting Columbus will lose about 1,000 jobs this year.
That doesn’t include any of the 2,200 or so Fort Benning soldiers that already have or will be departing the military post due to announced budget cuts by the U.S. Army. It also doesn’t include an undetermined number of civilian workers at the installation or the population loss from those personnel and their spouses.
The 1,000 lost jobs, Humphreys told the community and business leaders gathered at the Columbus Convention and Trade Center, are from local businesses that will see fewer soldier dollars in their cash registers.
“It’s primarily going to be where those troops would have spent money, like retailing and housing — consumer-dependent sectors,” said the economist, who used the term “retailing recession” during a question-and-answer session near the end of the luncheon.
Fort Benning’s Maneuver Center of Excellence already has said the troop cuts alone will leave a $229 million gash in the local economy from the loss of sales and other spending, with lost annual income amounting to $198 million.
The post has said as many as 974 jobs throughout area communities will disappear as part of a ripple effect with the deactivation of the 3rd Brigade Armored Combat Team on post. The mandated date for the Army’s reductions to occur is Sept. 30, although the brigade is expected to be fully mothballed by this spring.
Humphrey’s advice for Columbus economic development leaders in light of the population and job losses that could linger well into the future?
“Double down on economic development and try to compete aggressively and effectively for projects,” he said. “That’s what it would take to change the outcome, not just for 2016, but beyond that. You’ve got to bring in some big projects. That’s the bottom line.”
Humphreys did deliver some “positives” surrounding the city that will help blunt the pain from the lost jobs this year. He said the expanding Georgia and U.S. economies will be “supportive” of Columbus, particularly with local businesses experiencing growth from sales outside the area.
The hospitality sector also is expected to perform well locally, with business travel and tourism bringing visitors to the city. Those people will spend money on hotels, restaurants, retailers and at “compelling” local attractions.
“That’s especially important because your regional economy is 12 percent more dependent on leisure and hospitality jobs than the nation as a whole,” the economist said.
Humphreys also forecast that the financial and insurance sector in Columbus should continue to experience growth this year, while Columbus State University’s impact on the city has burgeoned as well and should remain an anchor for the economy.
“Over the last five years, the economic impact of Columbus State University on the Columbus MSA has increased by 16 percent, from 2,500 jobs to 2,900 jobs,” he said.
On the housing front, Humphreys again said that the Columbus-area market experienced a “less severe” slump than Georgia as a whole from the Great Recession. But while home sales and homebuilding in the state as a whole began rebounding five years ago, activity and single-family home prices in the Columbus area have been much slower to rebound.
“As of late-2015, single-family home prices in the Columbus MSA were still 13 percent below their peak level. At the state level, home prices are back to their peak level,” said Humphreys, who anticipates a slight decline in prices and building locally in 2016.
“My pessimistic short-term expectations for the region’s housing market reflects announced cuts at Fort Benning, which will cause the area’s population to decline for the next several years as defense spending winds down,” he said.
Presenting the forecast for Georgia Friday was Benjamin Ayers, dean of UGA’s Terry College of Business, which holds the outlook luncheon each year. His bottom-line message: The state’s economy will experience faster overall growth than the U.S., although job creation specifically will slow statewide.
“One reason why Georgia’s job growth will slow is that in the wake of the Great Recession many companies were too cautious about hiring and were essentially playing catch-up in 2014 and 2015. Now, most companies are no longer significantly understaffed. So the extra push for job growth is gone,” said Ayers, pointing out Georgia employers are encountering more pressure now due to turbulence in the U.S. and world economies. They will not be hiring as much, he said, but those who do bring on workers will likely them on the payroll full time.
Various numbers tossed out by Ayers included 5.7 percent personal income growth in Georgia, which would top the 4.9 percent projections for the U.S.
Georgia’s unemployment rate will average 5.5 percent this year, while single-family home starts will surge by 23 percent and multifamily starts (apartments) will climb by 10 percent.
The state will face challenges or “headwinds” this year as well, said Ayers, who also mentioned the federal government’s “restructuring” that has touched Fort Benning and Fort Stewart, Ga., near Savannah.
Any interest rate hikes by the Federal Reserve will pinch Georgians as well, he said, because of the relatively higher debt they carry and less savings they have at their disposal. Rate increases also will impact certain sectors in the state that are very sensitive to them, including real-estate development, construction, forestry and building materials manufacturing.