"What I mean by 'real' recovery is a decent, positive rate of job growth," says Dhawan. He expects the unemployment rate to rise to the 6.2% range by the middle of the year before leveling off to the 5.7% range in 2003.

"Things are definitely looking up," offers Dhawan. "Consumer confidence is improving, durable good orders were up in December and the stock market seems to be weathering the Enron storm rather well."

However, based on his forecast, Dhawan says to expect a few bumps in the road before things improve.

Highlights from the Economic Forecasting Center's report:

Real GDP will decline by -1.1% in the first quarter, grow by 0.8% in the second quarter. The economy rebounds sharply in the last two quarters of 2002 with 3% plus growth rates, which are also seen in the first half of 2003. For all of 2002, real GDP growth is 0.4%, followed by a 3.4% growth rate in 2003.

The Fed is expected to hold steady for most of the year, and then start raising the rate as inflation (in the core area) creeps up. Consequently, the three-month t-bill rate will average 1.9% in 2002, and rise to 3.5% in 2003, and further to 4.8% in 2004. The prediction for the 10-year bond rate is to average 5.4% in 2002, then rise to 5.9% in 2003, and the 6% range in 2004.

Investment decline will continue in the first and second quarters of this year with declines of 11.3% and 5.2% respectively. For 2002, investment declines by a total of 7.5%.The fiscal and monetary stimulus finally brings this number into the positive territory by 2003 when it is expected to grow by 5.4%.

The unemployment rate will average 6.1% in 2002, before coming down to 5.7% levels in 2003. On a quarterly basis the unemployment will touch 6.2% in the second quarter of this year.

Georgia Economic Recovery in Step with National Picture
Travel & Tourism, Industrial & Transportation Manufacturing Leads Rebound

Georgia's economy has lost 115,000 jobs since May of last year. These losses are in accordance with what has been happening at the national front - a recession. In the third quarter of 2001, the state economy lost jobs at a 3.1% pace which increased sharply to a 5.7% loss rate in the fourth quarter. 

"An obvious sign of lack of job growth is the rising office vacancy rate that has increased sharply to 16.7% in the Atlanta metro area," says Dhawan. "The damage was more severe post Sept. 11 when travel and tourism related jobs were lost - an industry that accounts for 8% of the Atlanta metro economy but has accounted for 30% of the jobs lost since September."

However, according to Dhawan's forecast, Georgia will also enjoy a recovery by early summer provided there are no further terrorist attacks and business confidence improves. 

"This recovery is very delicate and will need a lot of nurturing from the business community," says Dhawan. "If that happens then we will see a sustainable job growth pattern by the summer with travel and tourism, followed by industrial and transportation manufacturing leading the way. The recovery with then spill over to other sectors-known as the multiplier effect-which will result in a robust hiring in the business service sector."

Other highlights from the forecast:

For the calendar year 2002, Georgia will see a net gain of 20,000 jobs. Atlanta metro area job gains are estimated to be 14,000.

Service sector jobs slowed to a 1.3% growth rate in 2001 and are expected to contract further in 2002 by 2.4% prior to recovering to 3.8% and 3.9% growth in 2003 and 2004. Within services, the biggest decline will be in business services, which contracts further by 9.2% in 2002, after a 6.9% decline in 2001. This category will rebound to a positive 7% growth in 2003, followed by a 10.3% gain in 2004. The computer service category revealed a 1.1% decline in 2001 and is expected to pull back 2.6% in 2002. This category returns to just below year 2000 levels in 2003 and normal growth in 2004.

The unemployment rate for Georgia will continue to rise in 2002 to the 5.3% range by late summer and average 5% for 2002. Following the recovery in 2003, it will decrease slightly to 4.7%. For metro Atlanta, the unemployment rate will rise to 4.5% in 2002, up from 3.4% in 2001, and then decrease to 4.3% in 2003.
The impact of slower job growth is seen in the housing market. The number of housing permits issued in Atlanta is expected to decline sharply by 15.7% this year before recovering to a 3.5% growth in 2003.