Economist: Local unemployment to start falling dramatically in second quarter of 2010

It seems to be too rosy of an employment picture, but I hope he’s right.

After a few more rough quarters, University of West Georgia economist William “Joey” Smith predicted that local and state unemployment will fall dramatically beginning in next year’s second quarter.

Smith predicted that metro Atlanta’s unemployment rate would drop to 9.2 percent in the second quarter, from 10.4 percent in the first quarter, according to a university statement today. The statement was issued in conjunction with the university’s annual economic forecasting breakfast.

“The good news is the bad news is close to being over,” Smith said in the statement. “The recovery so far has been driven by optimism in the stock market and a bounce in consumer confidence.”

By the fourth quarter of next year, Smith said metro Atlanta’s unemployment rate would retreat to 6.5 percent. That would be an enormous decline from the current rate of 10.5 percent.

For the state, Smith predicted Georgia’s unemployment rate would fall to 8.8 percent in the second quarter of next year. That would be down from 10.2 percent in the first quarter.

By the fourth quarter, Smith predicted the state unemployment rate would be down to 6.1 percent — another tremendous fall from the current rate of 10.1 percent.

Some economists have been considerably more pessimistic than Smith is.

For example, many economists believe the national unemployment rate, which is currently lower than both the Atlanta and Georgia rates, will only decline to about 9 percent by the end of next year.

Are the city and state going to become that much stronger than the nation so quickly?

As they say, time will tell how good Smith’s economic model is.

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46 comments Add your comment

willie

October 27th, 2009
7:41 am

Wow, that is the most optimistic outlook I have seen yet. I sure hope he is right!

Christina

October 27th, 2009
7:48 am

The Economy

October 27th, 2009
7:50 am

What a joke, completely utter garbage. Know wonder our school system is failing, they’ll give anyone a degree. People, you aint seen nothing yet. It will get worse for the next 6 quarters, then level off. The TARP money has already flushed thru the system, the boost came and gone. Foreclosures will continue, unemployment will continue, layoffs will continue, crime will continue, bankruptcy will continue, rates are going higher, dollar value dropping, China doesnt want to buy our debt any more, Government not gonna but MBS after next quarter. But hay, what do I know. Live within your means people, stopped watchin the Real Hookers of Atlanta, and stop tryin to keep up with the Jones. Cuz the Jones are broke too.

Nativeson71

October 27th, 2009
7:51 am

I was laid off back in January. I had a new job within 5 weeks..same job, same industry…but the new company benefits SUCK. No vaca, no 401k, crappy insurance…etc.
While I am ‘beyond grateful’ to have a job and I can pay my mortgage I can not wait to work for a ‘real’ company again. I hope this guys forecast is correct…

California Dreamin'

October 27th, 2009
7:53 am

Did he also tell us where we could see the Loch Ness Monster? As a small business owner that talks to many other business owners (small and medium) – I can tell you that none of them have any plans on hiring any time soon. Furthermore, it’s only getting worse – everyone one is in survival mode until they see how much damage has been done to the economy.

What does Mr. Smith think is giong to happen to this “recovery (?!) driven by the stock market bounce and consumer confidence” when the stock market rolls back over to the 6,000-7,000 range, commercial real estate collapses (which most think will happen late FY 2010) and residential real estate falls another 10-15% over the next year?

I’m afraid Mr. Smith needs to get out of his incubator.

EJ Moosa

October 27th, 2009
7:53 am

Too bad he will be wrong. Companies will not start hiring until they are assured of profits. Year over year profits are still declining.

Only when profits return(not merely beating expectations) will there be hiring.

melissa

October 27th, 2009
7:55 am

He is extremely intelligent and uses complex statistical models. The state and university system has used his work for years…

Nativeson71

October 27th, 2009
7:56 am

Address to: “The Economy”….while living within ones means has always been the thing to do….you fail to realize that increased consumer spending is nearly based on people NOT living within their means. Shop till you drop…the economy loves that. I agree with you…but it is no more realistic than the West GA Professor…

Spelling Police

October 27th, 2009
7:57 am

Hey The Economy, you are right. Apparently some school just gave you a degree because it’s “no wonder,” not “know wonder.”

Charles

October 27th, 2009
8:08 am

This article is a joke– If anything, the unemployment rate is going further north, not south!

Peter Hoffman

October 27th, 2009
8:16 am

I am watching the pennies until we have a real President before I grow my business again.

GaNative

October 27th, 2009
8:18 am

I think the economist is wrong. I was out of work in 2007 for 11 months. I thought it was bad then, but I’m so grateful it was then instead of now. I’ve been an independent contractor (self employed) since 1979 so I was used to being without work for a short period, but not 11 months. I am due to be out of work again sometimes between January and February 2010, but this time I’m prepared for it. I think most people should look at doing their own thing because jobs in Corporate America will never be the same again. While the economy is down and there’s a lot of unemployment, I think it’s a great time to venture out and try to create something for yourself that no one can control and take away from you. I can see in the near future where big corporations will be begging for workers instead of laying them off as they do now because most middle class americans have learned from this.

Thinking Out Loud

October 27th, 2009
8:20 am

With all of the issues that remain unresolved, I truly would not bet the farm on this guy’s prediction.

In fact, there is lack of momentum in the current economic environment..glimmers of hope, perhaps more than continuing strength.. ie refer to bank failures, continuing tight credt, a weak dollar ( see the rise in crude oil as an example) with commercial real estate yet to hit the fan and no consumer emotion toward spending which reflects unemployment and unsure footing in the minds of American consumers. Inflation can’t be far behind which will be the cruelest tax of all.

All of this will take more than a couple of quarters to work through the complexity of our system especially with Washington providing even more uncertainty with their proposed legislation which inevitably creates more debt and we will end up paying for thier ineffectiveness via increases taxes ineffectively applied by bureaucrats…Health Care, Energy, and Stimulus…with little short term impact and perhaps little long term impact. None of the so called programs that this Congress has passed and likely will pass, have created an atmosphere for trust and fiscal soundness. Effectively, through their ineptness and political posturing, we are facing even more challenges.

We have only ourselves to blame. We elected these bozos…TARP, OMNIBUS, Cash for Clunkers where GM and Chrysler benefitted the least, Toyota, the most, and I could go on..one knee jerk reaction after another, all with unintended consequences.etc. Now, a proposed VAT?

How can we have confidence when our leaders consider solutions as political regardless of the impact on us? I guess it only matters when its time to fight for “their” jobs. They forgot a long time ago that they work for us!

So, don’t bet on a quick recovery.

Keep your chins up, my friends, it will get better but not demonstrably so, in the near term.

Dawg Fan 74

October 27th, 2009
8:20 am

Let’s hope he’s right….but, I doubt he is.
The stimulus spending was a joke.

PappyHappy

October 27th, 2009
8:25 am

Would like to see the metrics for which this rosy forecast is based. More specifically, what companies in the metro area are going to have the business to necessitate hiring staff??

Who Cares?

October 27th, 2009
8:37 am

I hate to sound like a Californian (which I’m not!), but I’m getting sick of all of the negativity! Vote out the corrupt politicians, report criminal corporate management for their wrong doings, and lets get moving productively again. This whole thing was set off because our society “promotes” criminal activities from the criminal minded. Send ‘em all down the road!

Mike Jones

October 27th, 2009
8:38 am

If you spread a lie enough. People will actually start to believe it. the AJC is in bed with the Democrats, and Democrats need for this economy to turn around, otherwise the 2010 elections will be a blood bath. Unemployment could be at 25% and this newspapers headlines will read something like this. “Unemployment in Ga. is at 5% and We can all think President Obama and other Democratic leaders”…

RGB

October 27th, 2009
8:39 am

As the joke goes, “Economists have predicted 7 of the last 3 recessions,” the same thinking can be applied to the jobs prediction.

This administration is hell-bent on further souring the business environment, so I don’t see the basis of a recovery that drops the unemployment rate from 10% to 6% in just a few quarters.

Metro Atlanta has lost about 3,000 jobs per week over the last year–so which industries are set to throw the switch the other way?

Mike Jones

October 27th, 2009
8:40 am

No wonder the AJC subscription renewals are declining in the double digits…

Noah

October 27th, 2009
8:47 am

Why is everyone so negative. This happens in every recession (Stock market leads the way by at least 6 months). I will be surprised if we see 6% by the end of next year but fully expect we will get down to at least 9%.

Noah

October 27th, 2009
8:48 am

As positive people were during the good times that the good times would last forever they are even more negative now.

[...] This would be good news. It seems to be too rosy of an employment picture, but I hope he’s right. [...]

Who Cares?

October 27th, 2009
9:03 am

By the way GaNative, I’m with you! I lost my corporate job in June after 25+ years of dedicated service, but I’m looking at it like it is a blessing. The job and benefits were good enough that I would have probably never left on my own, but I was miserable working for incompetent management that was supported by senior level corporate management that has proven time and time again to condone and reward criminal activities. I’ve started my own business and am working hard to make it fly! I too think that most people will figure out that the corporate world has changed,… and not for the better. Now if we can run the “leeches” out of public offices, we’ll be able to have a system that promotes a friendly business climate! I’m with you, do your own thing!

GaNative

October 27th, 2009
9:04 am

OK, wait a minute. This economy cannot be blamed Democrats or Obama. The Shid hit the fan when Bush and the Republicans were in office. But, I’m smart enough to realize that it can’t be blamed on them either. If you remember correctly, our economy started going down on 9/11 when the World Trade Center Towers went down. It wouldn’t matter who was in office (except Jesus Christ) when 9/11 happened, our economy started a nose dive.

GaNative

October 27th, 2009
9:10 am

I hear you “Who Cares” and wish you the best. I think you’ll do well because there is only one way to go and this is up. As the economy improves so will your business because we’ll feed off each other as small businesses and entrepreneurs take off. One more thing, I don’t see benefits being a big incentive in corporations anymore. They’ve raised the amount they take as your contribution towards insurance and you get less coverage. Also a lot of them have dropped or reduced their contributions on your behalf to 401 k’s. My wife used to brag about her benefits, then suddenly within one year her co-pay went from $20 to $150 on a prescription medication.

EJ Moosa

October 27th, 2009
10:05 am

Stocks do not lead the way. There is no correlation between the stock market and employment. There is no correlation between GDP and the stock market.

There is correlation between earnings (profit for you liberals) and the stock market, as well as employment.

It’s that simple.

Noah

October 27th, 2009
10:21 am

Based on history how can you not say stocks lead the way. Its been true almost every time. They lead the way because they go up because of hints of a recovery such as consumer confidence, earnings and other improvements. Its a leading indicator while employment is a laging indicator. I Guarantee you when job losses tail off the market will be going up.

Reality

October 27th, 2009
10:32 am

Economists and other learned individuals make predictions and people attack them. People have been fed legends about a man and a big, big boat loading two sexes (male and female)of every animal on earth in this big boat, and the foxes didn’t eat the chickens etc. A man dead for three days, comes back to life and travels to the far reaches of the universe wholebodily. None of the historians of his day wrote anything about the man. People find these instances plausible, but attack economists who have spent countless hours in schools of higher learning. Who said, “The truth is too simple for us, and we become angry at those who unmask our illusions.”

EJ Moosa

October 27th, 2009
10:33 am

How? Because I have analyzed the employment numbers, GDP, and the S&P 500 for the last 25 years. The market rises in anticipation of higher and higher earnings. They are not there.

Two out of three companies have earnings lower than a year ago. Do you really believe that they are going to have more employees while earning less money?

RGB

October 27th, 2009
10:42 am

“Why is everyone so negative?”

The President and Congress are raising the breakeven point for American businesses and consumers by adding more taxes and more regulation. This will reduce consumer spending, drive businesses out of business, and worsen employment prospects. Standards of living will continue to decline.

This is what concerns me:

1. Cap and Tax adds $1,700 in taxes to an average family.
2. Health care taxes – by taxing health care plans and shifting costs from government to private individuals and private insurers (who pass costs along in the form of premiums).
3. Proposed VAT tax.
4. Repeal of the Bush tax cuts – primarily paid by people who create jobs and contribute towards capital formation.
5. Increases in marginal rates on businesses and individuals.
6. Increase in the capital gains tax.
7. Soft drink tax on beverages the government deems unhealthy.
8. Growth in the U.S. debt. Accumulated U.S. debt from the formation of this country through G.W. Bush’s terms equaled $11.67 trillion. The Obama administration predicts debt will rise to 20.67 trillion in the next 10 years. This administration will cause more debt in 10 years than was caused in the previous 230 years.

Who will pay for this? You. And me.

People are looking at what they are likely to encounter under this new regime–and they don’t like what they see.

Those who voted for Obama to be fashionable will pay a big price for doing so. So will their grandchildren’s children.

RGB

October 27th, 2009
10:44 am

It’s sickening that an individual would use an economic blog to engage in religious persecution.

What you call a “legend” I call The Truth.

Every Knee Shall Bow.

EJ Moosa

October 27th, 2009
10:46 am

RGB,

Other than forgetting the Minimum wage increase, you are right on target…

And nothing in your list improves earnings….

That is why no one will be hiring….

Noah

October 27th, 2009
11:05 am

Time will tell. I personally do not believe that the economy will not recover and it will be all doom and gloom going forward. But these feelings are not much different then what people were saying in the early 80’s. I agree from a macro view there are serious questions long term because of our government. What was your view in 2005 on this subject. Was the world ending? Of course they have lower earnings, have you looked at what happened, the economy contracted. And companies reacted by laying off many people, cutting as much as possible to prepare for a credit crises which is now easing. But lowe earnings means they are still making money. This is not the first or the last time a recession hits, they hit at least every 10 years, often more.

GaNative

October 27th, 2009
11:08 am

LMAO at Reality’s comments!!!! What did Noah and his kin do with all the animal shid on the boat? Did they throw it in the water? Did they have a shovel???

EJ Moosa

October 27th, 2009
11:15 am

Noah,

Employment trails earnings growth by four to five quarters. Earnings growth year over year must be greater than 3 1/2 % or so to have employment rise. It is not merely about earning the same levels of profit as the previous year.

http://www.bea.gov/national/nipaweb/TableView.asp?SelectedTable=43&ViewSeries=NO&Java=no&Request3Place=N&3Place=N&FromView=YES&Freq=Qtr&FirstYear=2007&LastYear=2009&3Place=N&Update=Update&JavaBox=no#Mid

Check out line 17 of the table in the above link. Compare the year over year numbers and you will see when employment peaked and when it indicated we were headed down…

Nearly $300 billion in profits have been eradicated since the peak levels of employment. Now ask yourself what profits are going to look like going forward with all that RGB outlined above.

Some may be making money. But they went into business to grow earnings. Investors do not pay higher and higher prices for stocks if the earnings are not going to grow. And no one starts a business to just break even.

Noah

October 27th, 2009
11:59 am

I actually agree with the concerns but that doesn’t change the fact that things are getting slowly better.

RGB

October 27th, 2009
12:24 pm

“Higher taxes reduce profits, higher minimum wage rates reduce profits, new taxes such as carbon cap and trade will reduce future profits. More insurance mandates, more unionization are all going to decrease profits. So businesses must reduce their expenses to improve their profit picture. Right now they are trying to do this by reducing head counts, which reduced labor expense, insurance expenses, and more.”
Source: http://www.nolanchart.com/article6127.html

Great body of work, E.J. For my money, you are spot-on.

Keep it up! I’ve bookmarked your site.

EJ Moosa

October 27th, 2009
1:17 pm

RGB,

Thank you for the positive feedback.

EJ

Not Likely

October 27th, 2009
3:13 pm

He gives no reasons for a decline in unemployment, he just pulls these numbers out of the air. Who will be hiring? He has no idea.

Noah

October 27th, 2009
3:24 pm

These comments by everyone makes it sound like they believe unemployment will keep rising until no jobs remain. Most proposals by the feds listed are troublesome but they have not come to pass yet and the trends point to some improvement in unemployment but slow.

Not Likely

October 27th, 2009
3:48 pm

We have yet to see the big layoffs in state and local governments that will be required based on the much lower tax revenue. The twin engines of job growth under Bush were government and health care. I can tell you that there are ~300 new nursing graduates on the waiting list for a job at Wellstar. That is correct, nurses now are begging for jobs.

GaNative

October 27th, 2009
3:50 pm

Oh, there’ll be employment for sure. And surely the number of unemployed will drop for two reasons: 1. Most people will have expired their unemployment claims, therefore they are no longer counted. 2. Only Non Americans will be employed.

shadow 7071

October 27th, 2009
4:50 pm

So, Joey the economist in Carrolton predicts a dramatic turn in Georgia’s economy that will drive down unemployment from the present 10.2% to 8.8%. Now, I’ve read all the comments above and I believe that most folks really don’t see this happening. Now, of course there are those that think that the stock market is going to cure all. Foolish thinking. But please don’t believe me but do get some writings about the Great Depression so that you can fully understand how the economy behaves. But, back the Joey the economist, the Georgia economy and unemployment.

First, Joey just may be right! By Q2 2010 many people will have exhausted their unemployment benefits and they will no longer be part of the unemployment statistic. When this happens the Georgia unemployment rate will dramatically and statistically decrease. Of course it doesn’t mean that more people are employed, it just means we are not counting them any longer. In other words, they don’t count. And if Joey (and his fellow economists) isn’t counting them in the unemployment statistic then the statistic will be lower.

Second, what if Joey isn’t depending on this statistical manipulation for his prediction? What if he really thinks (and predicts) a dramatic improvement in Georgia’s economy is coming in 2010? Then we have to ask ourselves – what is the magnitude of this economic event that will drive our unemployment down from 10.2% to 8.8%?

Well, right now there are approximately 500,000 folks unemployed in GA (a recent example in the press said that all these people would be a line that would stretch from Chattanooga to Savannah). This is the official statistic. The statistic that says we have 10.2% unemployed. In other words, 10.2% unemployed equals 500,000 folks. Now, if we do a quick calculation we find that 8.8% (Joey’s prediction) unemployed is equal to about 430,000 folks being unemployed. Still a lot of folks unemployed but an improvement from 500,000. But to get to this 430,000 means that 70,000 people have to find jobs. And I think that’s what most of the commenters above are wondering – where are these 70,000 thousands jobs in the state of Georgia? Who is going to hire 70,000 workers? Which businesses in the state are going to hire 70,000 workers? What new businesses are moving into the state that will need 70,000 workers?

As an example, right now Volkswagen is building it’s world-class manufacturing facility in Chattanooga. When it’s fully operational it will employ 2,500 folks. If we use this as a standard then Ga. needs to build 28 world-class manufacturing facilities in 6 months in order to employ the 70,000 unemployed that is needed to drive down Georgia’s unemployment to meet Joey’s 8.8% prediction.

RGB

October 27th, 2009
5:14 pm

Small point: The story cites a prediction of unemployment decline to 6.5%.

“By the fourth quarter of next year, Smith said metro Atlanta’s unemployment rate would retreat to 6.5 percent. That would be an enormous decline from the current rate of 10.5 percent.”

That further strengthens your point, of course.

Trucker_18a @ Truckerboards

October 28th, 2009
2:27 am

All I’m conscious of is further corporate contractions, some very severe in the near future.

All I see is vacant strip malls. Even heard of a few with shuttered Adult businesses.

Would like to know where he got his magic wand, I sure could use a money tree about now,

Can I get a 10-4?