Georgia economy continues to grow but falls behind national economic growth in the 2nd quarter of 2021

Georgia’s economy continued to recover in the second quarter of 2021, although its growth rate slowed compared to the first quarter of the year as the state grew slower than the nation between April through June.

The state’s real (inflation-adjusted) gross domestic product (GDP) rose by 6.0% in the second quarter of the year, following a 6.9% increase in the first quarter of 2021 (percentage increases annualized).

By comparison, the national economy grew by 6.7% in the second quarter after rising by 6.3% in the first quarter (annualized).

With the second quarter, Georgia’s economy totaled $563,805,400,000, raising it above pre-Covid levels for the first time even as nonfarm employment in the state continued to trail its pre-Covid level by 85,000 jobs compared to the second quarter of 2019.

Georgia economy gains lower than the nation

Adjusted for inflation, Georgia’s economy grew by a compound rate of 11.4% between second quarter of 2020 and the second quarter of 2021, less than the 12.2% growth in the national economy.

Private industry in the state increased by 12.4% compared to 13.6% for the U.S. with manufacturing seeing an increase of 15.6% in Georgia compared to 18.4% nationwide.

Real estate and rental and leasing, the largest contributor to Georgia’s economy and accounting for 14% of the state’s GDP, rose over the year a relatively sluggish 3.5% compared to the nation’s 4.3% increase.

The information sector, which represents 11.2% of the state’s economy, increased faster than the U.S. over the year, rising by 21.1% compared to 15.9% nationally.

Agriculture and forestry grew by a sizeable 14.4% compared to 2.9% for the U.S., but the industry remained a less than 1% contributor to the state’s overall GDP and is actually less of a contributor to the state than to the national economy.

A notable lagging industry was transportation and warehousing. The sector’s GDP rose by 6.5% in Georgia over the year compared to 14.8% nationally. Increases in freight traffic in the state could not offset the negative effects of a slowdown in passenger airline business and reflects the importance of passenger aircraft transportation as a contributor to the state’s overall economy.

Accommodation and food services business, although showing strong growth, still fell short of the national averages as the industry saw a 58.3% rise in Georgia compared to 69.2% increase nationally.

A faster growing economy offers the prospect of increased job opportunities, so Georgia’s rate of GDP growth is an important indicator for its labor market.

Gross Domestic Product for Georgia, 3rd Quarter 2020

 

Real gross domestic product (GDP) for Georgia increased at an annual rate of 32.7 percent, according to information released by the U.S. Bureau of Economic Analysis. The percent change was smaller than for the United States as a whole, which grew by 33.4 percent.

The increases in the third quarter followed second quarter declines of 27.7 percent for Georgia and 31.4 percent for the U.S. In the first quarter of 2020, the state's real GDP declined by 4.0 percent, while the U.S. recorded a 5.0 percent drop.

In current dollars, the state’s real gross domestic product in the third quarter of 2020 totaled $627,667 million compared to its third quarter 2019 amount of $629,466 million.

Contributors to third quarter real GDP in Georgia

Economic sectors making the largest contributions to the state’s 32.7 percent gain included:

·         Healthcare and social assistance 3.90 percent

·         Durable goods manufacturing 3.40 percent

·         Accommodation and food services 3.29 percent

·         Wholesale trade 2.92 percent

·         Retail trade 2.36 percent

·         Transportation and warehousing 2.16 percent

·         Nondurable goods manufacturing 2.07 percent

Mining, quarrying, and oil and gas extraction was the only sector recording a decline (-0.01 percent); utilities showed no change over the quarter. 

 

According to BEA, the increase in third quarter GDP reflected continued efforts to reopen businesses and resume activities that were postponed or restricted due to COVID-19. The full economic effects of the COVID19 pandemic cannot be quantified in the GDP estimate for the third quarter of 2020 because the impacts are generally embedded in source data and cannot be separately identified. 

Gross domestic product by state is the market value of goods and services produced by the labor and property located in a state. GDP by state is the state counterpart of the nation's gross domestic product, the Bureau's featured and most comprehensive measure of U.S. economic activity. 

Real values are inflation-adjusted statistics—that is, these exclude the effects of price changes. Contributions to growth are an industry’s contribution to the state’s overall percent change in real GDP. The contributions are additive and can be summed to the state’s overall percent change. 

More detailed information on GDP rates by state can be found at GDP by State | U.S. Bureau of Economic Analysis (BEA).

 

State of Georgia personal income increases, individual income tax revenues decline: All driven by changes in the Atlanta metro area

Personal income in the State of Georgia grew by 3.8% in the third quarter of 2019, the same growth rate as the nation.

State personal income totaled $515.06 billion compared to $510.258 billion in the second quarter of the year placing the state as ranking 19th in its personal income growth rate.

Since the third quarter of 2018, the state’s personal income has risen by more than 4.3%.

The increase occurs even as Georgia reports lower Individual Income Tax collections over the quarter.

In July, Individual Income Tax collections came in $72.5 million above the amount collected in July 2018. In August and September, Individual Income Tax collections came in below amounts for the previous year by -$58.3 million, and -$27.4 million respectively. 

Combined, Individual Income Tax collections decreased by -$14.2 million compared to the same period last year.

GDP growth driven by the Atlanta metro area

Newly released information from the U.S. Bureau of Economic Analysis (BEA) demonstrates how the state’s development is being driven by the Atlanta metro area.

Georgia is highly dependent on the Atlanta metro area for the state’s prosperity and suffers when growth in the Atlanta area slows.

In 2018, the Atlanta metro area’s real GDP (a measurement of all goods and services adjusted for changes in prices, either inflation or deflation) rose by 2.5% compared to 2.4% for the State of Georgia and 2.9% for the nation.

The previous year, the Atlanta metro area’s real GDP rose by 4.1% compared to the state’s 3.7% and the nation’s 2.4% growth rate.

Five-year growth rates

More evidence for the outsized role that the Atlanta metro area plays in the state’s growth comes from recently released county GDP numbers.

The Atlanta area’s real GDP rose by 21.6% in the most recent five-year period compared to a rise of 17.35% for the state.

Five of the six counties showing the greatest dollar growth in GDP are located in the Atlanta area, including Fulton, Cobb, Gwinnett, DeKalb, and Clayton counties, each with real GDP growth greater than $2 billion over the past five years.

The only other county in Georgia with GDP growth of more than $2 billion was Chatham County, part of the Savannah metro area.

Fulton County was responsible for the largest GDP in the state, at $152.3 billion and recorded a 24.42% real GDP growth rate since 2013.

Georgia has 159 counties, the most of any state east of the Mississippi River, and Fulton County’s GDP exceeds the combined GDP of 144 of those 159 counties.

How has Georgia changed in 10 years after the last recession

Georgia has made a remarkable recovery since the last recession, 

but the state is still vulnerable to any downturn in the national economy.

A decade ago, Georgia was mired in the national recession. 

In 2008, the state’s gross domestic product (the broadest measure of economic activity) declined by more than 6%, and employment in the state fell by 3.4%, a sharper decline than the nation.

Since 2008, the State of Georgia has seen a remarkable recovery from the most recent recessionary period.

Over the past decade, the state’s real (inflation-adjusted) GDP has grown by more than 23% to $588.17 billion.

State of Georgia GDP 

Source: Federal Reserve Bank of St. Louis

Georgia Real GDP 2007-2018

 

Data Source: U.S. Bureau of Economic Analysis

Employment has risen by more than 13% even as the population increased by 8.5% up to 10.5 million, due to a combination of births and in-migration to the state.

Median household income has risen as well, growing from an average of $46,227 to $56,183, an increase of 21.5%. Unfortunately, when inflation is taken into account, median income reduces to a net gain of only 1.7% for the average household over the past decade.

Georgia Industries

Over the past 10 years, the largest industries in Georgia have become more concentrated and core to the state’s economy.

In 2007, the year before the recession took hold, Georgia’s four largest private sectors represented a total of 42.3% of the state’s economic activity.

In 2018, these four sectors combined for 43.4% of the state's economy.

·         Manufacturing in the state has slipped from 11.3% to 11.0%

·         Information sector has declined from 8.6% to 8.2%

·         Real estate and rental and leasing has increased from 11.2% to 11.9%

·         Professional and business services have climbed from 11.2% to 12.3%

One area of note is the arts, entertainment, and recreation sector. The industry recorded a significant increase in economic activity over the decade, rising by more than 59% and now represents more than $3.57 billion in economic activity.

No doubt, the decision to encourage movie and television production in the state through tax incentives has contributed to this rise, as well as individuals’ interest in more leisure activities.

In contrast, the state’s agriculture, forestry, fishing and hunting sector continues to shrink as a share of the state’s overall economic activity.

While the sector did rise by 4.8% over the decade, it actually became less important to the state’s economy, dropping from 0.9% of the state’s GDP in 2008 to 0.7% in 2018. In total, the state's agricultural interests represents $3.96 billion of economic activity in 2018.

2018 has seen a slowdown

Although growth has continued over the past decade, 2018 marked a slowdown in the rate of growth, in terms of GDP, although employment growth accelerated.

In 2018, the state’s inflation-adjusted GDP grew by 2.6%, a decrease from the 2017 rates of 2.9%.

For the fourth quarter of 2018, state’s inflation-adjusted GDP growth was 2.1%, slightly below the nation’s 2.2% growth rate.

Source: U.S. Bureau of Economic Analysis

Employment in the state grew by 1.9% in 2018, more than the 1.6% growth rate recorded for 2017.  

As a comparison, the nation’s employment grew by 1.8% in 2018.

Looking ahead

Georgia has had a significant recovery since the recession but remains dependent on many of the same industries that powered it before the last recession.

Since the value of its largest sectors has increased since the last recession, the state is even more dependent on these same industries’ health for its future growth.

Traditionally, Georgia does better than the nation in employment growth during good economic times, and worse than the nation during a downturn.

Data Source: U.S. Bureau of Labor Statistics

Despite employment growth, median household income remains below the nation giving residents less ability to build up savings in anticipation of any recessionary period.

At the same time, government, normally a reliable provider of employment and income during recessions, has shrunk in the state making it less of a counter-balance if the private sector begins to decline.

There is every reason to believe that if the nation goes into another recession, the state’s economy and its labor force will disproportionately again suffer.

Georgia’s economy grows faster than U.S. and Southeast in the first quarter of 2017

Real gross domestic product (GDP) in Georgia increased at an annual rate of 1.7% in the first quarter of 2017, according to newly released information from the U.S. Bureau of Economic Analysis (BEA).

The increase was greater than for the U.S. (1.2%) and the Southeast (1.5%).

Gross domestic product (GDP) by state is the market value of goods and services produced by the labor and property located in a state. The U.S. values may differ from the values in the national income and product accounts (NIPAs) because the GDP by state accounts exclude federal military and civilian activity located overseas (because these activities cannot be attributed to a particular state).

For Georgia, the increase in the first quarter of 2017 compares to a 1.8% increase in the fourth quarter of 2016 and a 6.5% increase in the first quarter of 2016.

Georgia’s GDP in the first quarter of 2017 was $537,264,000,000 (seasonally adjusted at annual rates).

The state contributed 2.8% of the nation’s total GDP in the first quarter, slightly down from its 2.9% contribution in the first quarter of 2016.

Georgia Growth Industries

Industries in Georgia recording the greatest annualized growth rates in the first quarter of 2017 included Wholesale Trade (0.36%); Government (0.28%); Nondurable-goods Manufacturing (0.25%); Construction (0.23%); and Agriculture, Forestry, Fishing, and Hunting (0.19%).

Industries that subtracted from real growth in the first quarter of 2017 included Utilities (-0.15%) and Retail Trade (-0.14%).  

Southeastern State GDP

States in the Southeast with higher rates of growth than Georgia included West Virginia (3.0%), Virginia (2.0%), Alabama (1.9%) and Kentucky (1.8%).

In the Southeast, North Carolina recorded the lowest annualized real growth rate in the first quarter of 2017, rising by only 0.7%.

Nationally, real GDP by state in the first quarter ranged from 3.9 percent in Texas to –4.0 percent in Nebraska.

National GDP

For the nation as a whole, industries showing the greatest annual rate of increase in the first quarter included Real Estate and Rental and Leasing (0.35%), Mining (0.32%), Durable Goods Manufacturing (0.29%), and Nondurable-goods Manufacturing (0.26%).

GDP by state is the state counterpart of the Nation's GDP, the Bureau's featured and most comprehensive measure of U.S. economic activity.

Current-dollar statistics are valued in the prices of the period when the transactions occurred—that is, at “market value.” Also referred to as “nominal GDP” or “current-price GDP.” Real values are inflation-adjusted statistics—that is, these exclude the effects of price changes. 

Source: U.S. Bureau of Economic Analysis (BEA).