ATLANTA — The state economist says a recession is probably looming in Georgia. Dr. Bob Buschman gave the gloomy forecast to state lawmakers Tuesday, who are spending the week talking about money.
The last big recession was 17 years ago, driven by risky mortgage loans and threw a lot of people out of work. If there’s one this year, the state’s economist says it will be less impactful.
The good news, Buschman told lawmakers, is that the rapid inflation of three years ago has slowed considerably. Gasoline prices, in particular, have dropped. Georgia’s unemployment rate is lower than the national average.
Buschman said it looks good but not necessarily good enough for Georgia to avoid a recession in the first half of this year. In fact, he said the probability is "sixty-three percent. I lean toward there probably being a recession but it being mild."
The main reason, he told lawmakers, is that interest rates are still high, led by mortgage rates that are dampening somewhat the state’s real estate markets – at least compared to a few years ago.
While inflation has slowed, Buschman said, "Inflation is not down enough yet. So, the (Federal Reserve Board) is going to stay tight for a little longer. There’s a risk they’re going to stay too tight for too long and tip us over into recession."
Meantime, the state government’s coffers are still flush with cash. The state is planning a spending spree on transportation projects, school buses, state employee salary hikes, and cuts to income taxes.
However, Buschman said – it’s only part of the picture.
"'Can we really fall into a recession with labor so strong? And unemployment so low?' 'Well, of course, we can,'" he told lawmakers Tuesday.
When inflation surged in 2021, it became a big political issue nationally. If there’s even a mild recession this election year in Georgia, look for a repeat of that.