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Fintech, information sectors show jobs growth

Upward employment trend weakens across Georgia

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ATLANTA – While much of Georgia struggles with job growth, the information and financial activities (fintech) sectors are propping up the state’s jobs picture. That was part of the economic forecast delivered Aug. 23 by Rajeev Dhawan, director of Georgia State University’s Economic Forecasting Center. Much like the economy itself, Georgia’s jobs growth has been slipping after peaking at 32,000 jobs per quarter in 2014. Jobs fell to 28,500 per quarter in 2015 before rebounding to 30,000 jobs after a slow start in 2016. But 2017 has been sluggish, with a 25 percent fall-off from 2016 averaging only 24,500 jobs in the last two quarters. In the first six months the information sector grew by 4,100 new jobs (after registering no new jobs in the last half of 2016). “This is one of the strongest six months of job additions since the first half of 2014,” Dhawan said. Georgia boasts such major fintech companies as Kabbage, TSYS, Equifax and WorldPay along with such major insurance corporations as Blue Cross Blue Shield and Kaiser Permanente. Fintech added nearly 7,000 new jobs in the first six months this year, more than doubling the 3,000 jobs in the previous six months. In all, fintech, information, healthcare, transportation and wholesale represent industries with higher paying jobs, so their growth has huge ripple effect implications for the state’s entire economy. However, grouped together, these companies added 32,000 jobs so far in 2017 but are short of matching the 37,000 jobs these sectors added in the last six months 2016.

National forecast:

Fed rate hike, tax cuts coming

Nationally, Dhawan said we can expect a personal income tax cut and a Federal Reserve rate hike. This will occur after “October debt ceiling deliberations that at times will border on theatrics,” Dhawan said. “It will first get a bit shaky in October as the debt ceiling debate unnerves the financial markets, but only for a short while. Having no big legislative victories by then, Congress will tee up a personal income tax cut by Thanksgiving.” A small personal income tax cut for the middle class will boost consumption and growth into 2018, but Dhawan said he expects it will be followed by an interest rate hike in December. “You tap the brakes harder only if you are gathering speed,” Dhawan said. “But, there is one small caveat on which a rate hike hinges. Markets will punish uncertainty surrounding the future head of the Federal Reserve.” Janet Yellen’s term as Federal Reserve Board Chair ends Feb. 1, 2018. In the short term, the forecaster does not foresee much happening regarding infrastructure. “I do not expect much infrastructure spending in coming years,” Dhawan wrote. “If it happens, it will help growth in 2019 and beyond. The multiplier takes a long time to originate from these types of spending.” Meanwhile, Dhawan does not foresee international markets generating any problems. He said the appreciation found in the global stock markets is a sign there is little to worry about. “Markets can live with political dysfunction as long as the playing field rules are not changed capriciously,” Dhawan said. “They are signaling the Trump administration’s rhetoric versus its actual and projected actions on trade are not matching up.” The lack of any tariffs imposed on China suggests the current administration is still relying on President Xi Jinping to manage the “real problem child in the geopolitical domain, North Korea.

Georgia Economic Report Card*

    Jobs Added Q2 12 Mo. Grade Comments
    Civilian employment 45,000 155,000 A+ Strong small business growth?
    Total non-farm jobs 22,500 115,000 A- Monthly job gains all over map
    Manufacturing -1,600 600 C- Sector sees effect of strong dollar
    Financial jobs 2,900 10,600 A Stock market gains buoy section
    Business service jobs 9,000 32,000 A+ Corporate sector rebounds from Q1 doldrums
    Healthcare jobs 1,900 10,300 A- Takes a breather in Q2
    Hospitality jobs -900 18,600 B+ Shows first signs of moderation
    Info & technology 3,900 4,100 A Data confirms news announcements

*SOURCE: GSU ECONOMIC FORECASTING CENTER

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