CSRA Economy Rises as New Buildings Go Up
By Gary Kauffman
Simon Medcalfe has a theory to explain why his local predictive indexes didn’t foresee an uptick in Augusta’s economic activity – cranes.
Medcalfe, economist with the Hull College of Business at Augusta University, presented his 10th annual Economic Forecast Breakfast on Dec. 14. One of his graphs showed how the predictors and the actual economic activity has risen virtually identically, but then a few months ago, the actual activity took a sudden sharp upturn.
“I don’t know why the local index is no longer an accurate predictor,” he said, “but I suspect it is something intangible to the local area that is not in the data. My suspicion is that it’s a five-letter word that starts with C – crane.”
Medcalfe pointed out the number of cranes visible in a relatively concentrated area in the downtown area, counting six along the 13th Street corridor. Those include the ones across the river at North Augusta’s Riverside Village development, the Georgia Cyber Innovation and Training Center on Reynolds Street, the new hotel on Broad Street and the cancer center construction in the medical district.
“I don’t remember a time when we had six cranes in the downtown area,” he said. “I’ve never felt such a buzz and feeling of excitement for growth since I moved here.”
After the meeting, he added that the visibility of so much major construction boosts the confidence of others considering building projects in the CSRA.
“I feel that investors and developers who are looking in the area, when they see that kind of activity, think, ‘That’s where I need to be at,’” he said.
Medcalfe began his annual economic forecast in 2009 at the lowest point in the area’s economy. That year growth was negative 3 percent.
“Back then, the jokes were pretty bad,” Medcalfe said, alluding to his annual barrage of puns and corny jokes. “But the recession was not as bad here as in other places.”
Things picked up in 2013, and the CSRA’s economy has grown steadily, including by 2.4 percent in 2015 and 2.1 percent in 2016. That still leaves Augusta trailing Atlanta, Gainesville and Savannah, which have averaged double-digit growth in the past four years.
Medcalfe noted that 80 percent of all jobs created in Georgia in the past four years were in those three cities.
But the Labor Market Index gives a broader picture of how the economy is doing. Augusta’s growth of 1.4 percent on that index is on par with Savannah and this year moved ahead of Gainesville.
In 2015, Medcalfe introduced his Economic Well-Being index, which looks beyond economic numbers to other factors that play into a feeling of well-being, such as gross domestic product, income and poverty, education, health, crime and the environment. Augusta’s rank is generally higher on that index than where it ranks in GDP alone.
Medcalfe had projected a flat growth in the job market in 2017, and for the first six months his prediction was accurate. But then in the middle of the summer job growth spiked upward and has fluctuated up and down since.
He thinks that growth will continue to be robust.
“Will it be good enough to catch Atlanta?” he asked. “I don’t know but some of the charts are showing that the potential is there.”
That is because of some slack areas in the economy that can still be tightened. The average hours worked in the CSRA is 34.9 per week, meaning employers could increase jobs without significant amounts of extra money. Unemployment is at 4.5 percent, so there is still room for that to decrease as well.
Medcalfe noted that the CSRA’s job market is changing, though, becoming more concentrated, which could create a new outlook in the future.
“Employment is becoming concentrated in fewer large sectors,” he said. “As it concentrates in fewer industries we could see more rapid growth. Or we could have peaks and valleys that we haven’t had in Augusta.”
Tera Bonsell, a senior marketing major at Hull College of Business, gave a brief presentation of her study of the area housing market. She found that since 2009 housing prices have increased by $27,000. Her study projects that those prices will increase by $6,000 in the first nine months of 2018.
The study, however, was a macro of the entire Metropolitan Statistical Area, which includes Aiken and Edgefield counties in South Carolina, and did not break down prices by area, or the rates of increase at various price breaks.