Economist: Tech changes slow recovery
While recovery from the economic recession has not been as fast as anyone would have liked, Georgia’s economy is better off than it was two or three years ago, according to Donald Sabbarese, director of the Coles College of Business Econometric Center at Kennesaw State University.
Sabbarese spoke Wednesday to more than 100 participants at the 30th annual Berry Business Outlook Conference.
Recovery from the recent recession is taking place at a much slower pace than any of the past four recessions, he said. Those four recessions go as far back as 1981, Sabbarese added.
Changing technology, he said, has played a role in slowing recovery, because many people out of work need more education to re-enter the workforce.
“The technology is so different than it was 10 years ago, so we’ll have new job growth but I don’t think we’ll have anything like we’ve had in the past recoveries,” Sabbarese said. “A lot of people have been unemployed for a long time and I think their skill levels may be antiquated and I think that’s another challenge we may have moving forward, but that’s what an education system is for.”
Businesses have money and are investing, but they are investing in capital, but not human capital, he said.
“Manufacturing is changing,” Sabbarese said. “They’re losing manufacturing jobs in China because of the technology.”
He said the economy has been adding an average of 175,000 jobs a month. “That’s good but that’s not good enough,” Sabbarese said.
“The economy needs to grow 135,000 jobs a month just to keep up with population growth. That doesn’t leave you with many jobs for all those people who are unemployed or lost jobs and are looking for jobs,” Sabbarese said.
Georgia, according to the economist, is rebounding a little better than much of the rest of the nation. “We’re moving in the right direction,” Sabbarese said.
Looking specifically at the economy of Rome and Floyd County, Sabbarese said that 2008-2009 was particularly rough on the local economy. “It looks like 2013 is going to be pretty solid for you guys and then 2014 looks really solid,” Sabbarese said.
Job growth in healthcare services in Floyd County is nearly double the growth across the state.
“You have a really great niche. You have some really good hospital services up here,” Sabbarese said.
“We’re still not where we need to be,” Sabbarese said. “Because payroll taxes have gone up and some other taxes have increased, I don’t think people have adjusted to that and going forward we’re going to see more adjustments in consumer spending”
The Kennesaw State economist said that part of what fueled a big run-up in the economy in the middle years of the last decade was the dip in mortgage rates that saw a lot of people re-finance. Sabbarese said a lot of people took that cash out and went on a buying spree.
Sabbarese predicted that by 2020 the national debt will easily exceed $20 trillion. He suggested serious tax and entitlement reform will be needed.
“Medicare is going to be a bigger problem than Social Security,” Sabbarese said.