In early January, CREW Atanta and CoreNet, Atlanta chapter, hosted their annual 2016 Economic Forecast meeting. Dr. Marci Rossell, former Chief Economist for CNBC, was the featured speaker for the ninth consecutive year and presented her Atlanta and National outlook during the event. Rossell takes complex economic issues, often dull in the button-down business press, and makes them relevant to people’s lives, families, and careers.
Rossell’s upbeat presentation shed some light on the many recent economic changes worldwide, and how these relate to our city. She indicated that we are in for a rocky ride with unrest overseas, rising interest rates, and a crashing Chinese stock market.
Housing Market Recovery
A typical housing market recovery happens over ten-year cycle, which we’ve certainly seen from 2006 to the present in Atlanta. However, Rossell pointed out Atlanta’s housing market recovered earlier than usual, with home prices reaching pre-recession values for the first time during the summer of 2015, which was somewhat ahead of schedule.
Rossell predicts Atlanta’s housing market will continue to grow. Homeowners in adjacent states that aspired to relocate to Atlanta for better jobs before or during the recession were no able to do so, with their home values “underwater”. With the broad-based recovery of the housing industry, these workers are once again looking to move into Atlanta from surrounding states. Rising home values and less expensive energy make moving an affordable possibility for many in 2016.
Steady Job Growth – With Higher Paychecks
Atlanta is experiencing faster job growth than the United States overall. Rossell explained that, in the last five years, approximately 45% of the city’s new jobs pay above the national average.
Georgia’s top employment sector – professional and business services – has steadily created jobs, with local companies announcing expansions and national companies relocating here. Part of the draw for these companies is Atlanta’s robust workforce: 35% of Atlanta adults over 25 have a bachelor’s degree, compared to 20% for the US.
Despite higher than average job growth in Atlanta over the past several quarters, Atlanta’s overall unemployment rate was still higher than the nation’s. In December, unemployment finally dropped to 5%, the lowest rate Atlanta has seen in over 10 year and equal with the national average. Rossell expects to see unemployment drop below 5% in 2016.
Positive Effects on Business
As the job market grows in favor of employees, workers that took time off during the recession are expected to start re-entering the workforce under these more competitive circumstances.
Falling gas prices are important as well. Since Atlanta does not have a large oil and gas business sector, we will reap the benefits of lower prices without causing harm to the economy, unlike cities like Houston.
Rossell compares cheaper gas and energy costs to a tax break for Americans. If each household unexpectedly gains $2,000 a year by spending less on gas, most will spend it on discretionary items such as dining out, shopping, or home improvements.
Atlanta’s strong demographics are also critical to business growth. Atlanta is a younger city than most: the 18-34 age group forms one-third of Atlanta’s population compared to only one-fourth for the nation. Median household income for the metro area is also 10% higher than the national average.
With consumers having extra money to spend, new businesses relocating to the area and educated millennials moving in almost daily, it looks like Atlanta is going to enjoy a prosperous 2016!
Blog contributed by Billy Hobbs, Managing Principal of Cresa Atlanta. Billy has focused 27 years of his career on tenant advocacy and is an active member of CoreNET. He represents tenants in all Atlanta submarkets and across the nation. For more information, contact Billy at bhobbs@cresa.com or 404-446-1579.