The state of metro Atlanta’s economy

Moderated by Rick Badie

Georgia’s business leaders say metro Atlanta’s economy has reached a crisis and sits near the bottom of the heap when compared to the speed and strength of recovery in other metropolitan hubs. How can the region regain its economic vitality? Today, a metro chamber executive outlines Forward Atlanta’s new five-year initiative designed to jump-start the economy. And a Georgia Tech economics professor writes that the euro and debt woes in Europe hit closer to home than some of us realize.

Returning sizzle to ‘Hotlanta’

By Sam Williams

Metro Atlanta is in crisis. Our region lags behind our peers in job growth. We are near last compared with other major metros in recovery strength and speed, and we have virtually the same number of jobs now as in 2000. If you adjust for construction and real estate, we have created only 50,000 jobs in the past 10 years.

We are accustomed to being at the top of our peer cities. We were known as “Hotlanta,” but the recession hit our region harder due to real estate and financial services.

We are not recovering as fast as we have in prior downturns.

The business leaders of our region who serve on the Metro Atlanta Chamber board started to research how we could recapture our lost stature.

They knew that big, bold ideas would be required to jump-start our region’s economy. They also concluded that we must be more collaborative in working with other economic development organizations.

MAC engaged the Boston Consulting Group to help us develop a new five-year economic recovery strategy. BCG surveyed dozens of economic development groups in our region, talked to more than 600 chamber members, conducted 120 one-on-one interviews with CEOs and government leaders, hosted more than 10 sessions with up to 100 leaders and spoke with experts in more than 20 metro areas.

Forward Atlanta has a new five-year strategy. Since its inception in 1925, Forward Atlanta has funded numerous business recruitment campaigns, provided seed money for Atlanta’s Olympics bid, helped save Grady Memorial Hospital, launched a Latin-American business campaign, created a China strategy that saw Mayors Shirley Franklin and Kasim Reed lead trade missions, invested in a water action plan and invested in the four-year legislative initiative that set up the July 31 regional transportation referendum.

Our goal with the new Forward Atlanta strategy is simple: reposition Atlanta as a top-tier global city. Collaboration around the region is essential for our success.

The great news is that our region is not starting from scratch.

We have the best airport in the world and one of the nation’s busiest ports. We must pass the transportation referendum July 31 to continue to be competitive.

Atlanta is one of the top six college towns in the nation. We have a business-friendly community. We are the No. 2 metro for lowest cost of doing business of the 27 largest metro areas.

Our strategy is focused on five pillars. First, we must focus on subcluster industries where we have global strength such as wireless mobility, health IT, clean tech, cybersecurity, advanced manufacturing and supply chain.

Second, the Federal Reserve Bank and researchers showed us that start-up companies and growing smaller businesses into larger ones is a sure bet for job growth.

We are partnering small businesses with Atlanta’s Fortune 1000 companies. MAC will make this shift over the next several years to create an ecosystem for start-up entrepreneurs.

Third, we need to continue elevating our quality of life and core infrastructure such as reinvigorating pre-k through college education, ensuring our long-term water supplies and growing the port of Savannah.

Fourth, we need a stronger business relationship with our colleges and universities. More can be done to create jobs from students’ research, build bridges for companies to our universities and look for emerging technologies. Partnerships with our universities also will help develop better courses, generate leadership training and see company creation.

Lastly, we need to tell the story of Atlanta as a city that constantly reinvents itself, pursues dreams and overcomes obstacles.

We stand on the shoulders of giant leaders who have done this for decades. We must find the good and praise it.

During the next six months, our business leaders will form task forces and teams with leaders from business and academia, along with entrepreneurs, government officials and our international partners, to create a detailed five-year action plan in each of these five pillars.

Our region’s business, civic and political leadership, now more than ever, must come together.

Sam Williams is president of the Metro Atlanta Chamber.

European crisis bringing shivers to Georgia

Thomas Boston

Contagion from the eurozone debt crisis is here in Georgia today. When you read about contagion from the crisis, don’t think of Spain or Italy defaulting and U.S. depositors standing in lines to withdraw cash from the bank. Think of the mortgage note you cannot refinance or the student loan you cannot get.

According to the World Factbook, Greece’s sovereign debt is 165 percent of its GDP. It ranks fourth-highest in the world. Closely following are three other eurozone countries: Italy, 120 percent; Ireland, 109 percent; and Portugal, 103 percent. Spain’s debt is 68 percent of its GDP.

To the average Georgian, the eurozone debt crisis is unfolding thousands of miles away. Furthermore, all the talk about contagion is simply speculation about the fallout that might occur if a nation defaults on its sovereign debt.

The typical perception of contagion is depositors standing in long lines to take their money out of banks in case the bank’s trustworthiness is undermined by bad investments in Europe. While that sounds like a credible scenario, it overlooks one thing: Contagion has already hit Georgia and the United States. It has come in the form of “death by a thousand cuts,” rather than by a knockout punch.

During the fourth quarter 2011, the economy was humming along at 3.0 percent GDP growth and creating more than 250,000 jobs monthly. As the threat of the European debt crisis heightened, U.S. domestic investment and consumer spending plummeted noticeably. Last quarter, the U.S. GDP growth was 1.9 percent and monthly job creation fell below 100,000.

Bank of America has more than $17 billion invested in the sovereign debt of the five eurozone countries most likely to default: Greece, Italy, Portugal, Ireland and Spain. J.P. Morgan and Citigroup each has $14 billion, and Morgan Stanley and Wells Fargo each has $3 to $5 billion. Wells Fargo and Bank of America also have a large presence in Georgia, thus linking the state’s economy to the debt crisis.

The eurozone finance ministers recently agreed to dispense with the requirement that the European Central Bank lend only to sovereign governments. The compromise means that banks can be rescued by the ECB without governments having to go further into debt.

In exchange, the eurozone countries agreed to greater supervision by the ECB and stricter bank regulations.

This agreement goes a long way in relieving some of the immediate economic stress on member states. It is still subject to the ratification of the German Parliament.

The eurozone crisis also affects Georgia’s economy in non-financial ways. Georgia ranks 12th among U.S. states for the dollar value of global exports. Of its $34.7 billion in total exports in 2011, about 18.8 percent went to the European Union, or close to $6.5 billion dollars.

Georgia exports to the E.U. will be much lower next year because the region is at the threshold of a new recession, brought on in part by the strict austerity measures used to address the nations’ deficits. The latest International Monetary Fund estimate of eurozone growth is a shockingly low .2 percent.

Georgia’s top 10 industries for exports to Europe include transportation equipment, machinery (except electrical), paper, chemicals, computer and electronic products, miscellaneous manufactured commodities, electrical equipment, appliances and components, food manufacturers, minerals and ores and agricultural products.

Georgia businesses earned $279 million in European tourist dollars in 2011, a 25 percent decline from 2010.

If you are a small business, think about the expansion plans that are still on ice or the durable goods that your customers cannot finance.

Finally, think of Georgia’s 8.9 percent unemployment rate that has changed very little over the last six months, since the eurozone debt crisis deepened.

Thomas Boston, a Georgia Tech economics professor, is publisher of www.gazelleindex.com, a blog for small and minority businesses.

16 comments Add your comment

SAWB

July 18th, 2012
12:04 am

The improvement in efficiency experienced by American business over the last few decades has reduced the need for employees particularly at larger corporations. As we continue to implement processes that make our lives easier we inevitably eliminate another job or two. While much has been made of outsourcing a lot of the jobs that have been lost were not outsourced, but simply eliminated.

Our political and business leaders like to focus on the large corporations they want to attract to Atlanta, but most of these corporate offices have few actual employees and most actually relocate people to Atlanta. We have to find a way to spur growth in smaller and medium size companies. There are still plenty of intelligent and motivated people looking to start or grow a business, but the current economic malaise is holding them back. Regardless of what our President may believe the American entrepreneur is the only thing that will get us out of this crisis. Government needs to assist or at least get out of the way.

John Ellison

July 18th, 2012
6:22 am

Our core (downtown) is rotten. Make it a safe and desirable place to live and visit or we’ll end up like Detroit.

[...] Two opinions on the state of metro Atlanta’s economy [...]

PATSy

July 18th, 2012
9:25 am

What is the U.S. debt % of GDP ????

Grob Hahn

July 18th, 2012
11:10 am

Atlanta has its head up its arse and has for years. We can’t endure crooked leadership bent on racial supremacy and expect to advance. In fact, when we shed the white power structure all we did was trade it for an equally corrupted black power structure. If not for the infrastructure, Atlanta would have been Detroit long ago.

A trip through our airport is the first impression many get of Atlanta. What do they see? They see that the vendor contracts are predominantly non-white as are most of the other services. They get a full serving of “blackitude” before they even reach downtown, particularly if they have chosen to suffer the MARTA ride.

It’s easy to label me as a “rac|st” for saying these things, but it’s time to take a step back folks. It’s time to recognize that an airport worker shouting “muh-fuggin” this and that into his cell phone while walking through the airport in uniform is WRONG. It’s time to realize that diversity doesn’t mean “No Whites Need Apply”. As long as we have this “need” to display Atlanta as a proud example of black supremacy, we head down the road that Detroit and Gary have suffered. If diversity is our ultimate strength, how come white people don’t seem to matter or are otherwise not wanted?
Grobbbbbbbbbbbbbbb

BehindEnemyLines

July 18th, 2012
12:34 pm

re: “invested in the four-year legislative initiative that set up the July 31 regional transportation referendum”

And with that decision went any credibility you might have ever hoped to have.

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Vuduchld

July 18th, 2012
1:28 pm

Atlanta is a 20th century city, get used to people.

JV

July 18th, 2012
2:25 pm

Well er, say what?

“During the fourth quarter 2011, the economy was humming along at 3.0 percent GDP growth and creating more than 250,000 jobs monthly.” – Thomas Boston

” If you adjust for construction and real estate, we have created only 50,000 jobs in the past 10 years.” – Sam Williams

sam

July 18th, 2012
2:59 pm

The comments above about the airport are absolutely true and a real turnoff to people from other, more culturally diverse, cities. I think however that buying that expensive painting for the concourse could really help the city (tongue firmly in cheek).

Bernie

July 18th, 2012
4:49 pm

Atlanta has been in a crisis since the great population shift of the 1960’s. The rumblimgs never ceased. its just that we have managed to put a smile on it, all the while knowing neither group Black or white trusts the other. White flight is what gave us Atlanta’s black leadership. Black leadership gave us cronyism and nepotism of the highest order. Just take a look at the records of ownership of all the concessions since the building of that airport. Many of those relationships can be directly tied to City of Atlanta officials in some capacity.

While the northend of Atlanta has seen great growth and expansion. Anything below Five points has been zero growth awash with stagnation and bankruptcy, including its citizens.

The Black leadership of Atlanta has always been self serving and for the benefit for a small group of select few. There Job ultimately has always been to maintain the staus quo and resist any group or individual to change it otherwise. Now they are older and no longer in power many of its citizens are left adrift without any source of voice or direction, unless it is supporting anything that benefits the northend of Atlanta and its residents.

Linda

July 18th, 2012
5:42 pm

The city ofAtlanta has let the infastructure completely fail,while granting a 4Million dollar art contract at the airport.I will never vote for the Splost or any other tax while the city of Atlanta shows disreguard for the people who pay the bills.I haven’t seem a street repaving crew for over 3 years. The streets are a mess and have been for years. The chickens have come home to roost–No new taxes.

Bernie

July 18th, 2012
7:04 pm

The State of Atlanta’s Economy will never change or grow until we have a REAL Leadership that is inclusive of and for all of its residents. So far the growth has been for many years all one sided while the other is treated with indifference and absolute defeatist attitudes. ” TOO Busy To Hate” was a slogan not a reality.

middleground

July 18th, 2012
10:04 pm

Well having schools that teach children to cheat is not a city worth investing in. Why help Atlanta they are just crooks pumping money to their friends.

Bernie

July 18th, 2012
10:53 pm

Today, I saw Mayor Reeds T-SPLOST support commercial for the very first time. I must admit as an African American Male born and raised in Atlanta I found it quite offensive. The presenting of nothing but all current Black office holders with the exception of one Andy Young. This is pandering at its worse and never has a political ad ever been presented to the people using such racial pandering. Do they really think that ALL African Americans in this city would fall for such blatant pandering to one side to support an issue that really does nothing for the African American community. Mayor Reed I must say I am surprised…but not really! this kind of tactic does not advance the cause of good relations for no one or any specific community.

Morning Reads for Wednesday, July 18

July 19th, 2012
8:28 am

[...] Two opinions on the state of metro Atlanta’s economy [...]