Georgia’s economy will bounce back from the coronavirus pandemic next year, despite inflation and the latest COVID-19 variant, the dean of the business school at the University of Georgia predicted Monday.
“We’ve made tremendous progress getting back to normal, Benjamin Ayers of UGA’s Terry College of Business, told an audience of about 475 business leaders at the Georgia Aquarium in downtown Atlanta. “By late 2022, Georgia’s economy will fully recover from the COVID-19 recession.”
In fact, Georgia’s forecast economic growth rate of 4.3% next year will outperform the predicted increase in the nation’s gross domestic product of 4.0%, Ayers said during Terry College’s annual Economic Outlook luncheon.
That growth will be driven mainly by strong consumer and business spending and a robust housing market, he said.
Pent-up demand by consumers, particularly for services they couldn’t get during the pandemic, will result in both higher consumer spending and less saving. On the business side, companies will spend more on technology needed to facilitate remote work.
While there will less demand for commercial real estate due to the increase in Georgians working from home, Ayers expects significant increases in single-family and multi-family housing construction.
But home prices that have risen 23% during the pandemic are expected to increase more slowly next year.
“Homes have become much less affordable, and we expect mortgage rates to be higher,” he said.
Ayers said he expects Georgia’s workforce to fully recover in 2022. The state’s unemployment rate should average 3.2% next year, a point below the national jobless rate.
The most job growth is expected to occur in hospitality and live entertainment, the economic sectors hurt worst by the pandemic. Sectors such as manufacturing, health care, retail and government will grow at slower rates.
Ayers said potential headwinds that could result in lower-than-expected economic growth include supply chain disruptions, worker shortages and the lingering pandemic.
“Inflation may run higher and longer than expected,” he said. “A large increase in interest rates could trigger recession.”
But Ayers rates the likelihood of a recession as “quite low.”
Mark Vitner, senior economist with Wells Fargo Securities, who gave the national economic forecast, said states including Georgia that reopened their economies early in the pandemic are recovering faster than states that locked down over a long period of time.
Vitner said he doesn’t expect much economic impact from the spread of the new omicron variant because Americans have grown more accustomed to the virus than in its early days.
“People are less afraid of contracting the virus,” he said. “We’re likely to see less economic blowback from a resurgence of COVID.”
Still, Vitner predicted inflation will likely remain a problem for the U.S. economy for the next three to five years if not the rest of the decade.
“We’re not going to see a replay of the ‘70s,” he said. “But inflation is going to be persistent, and it will be pernicious.”
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