In this photo provided by the Georgia Port Authority, international longshoremen drive some of the first Kia Tellurides to be exported via the Port of Brunswick to the roll-on/roll-off vessel Sirius, Tuesday Feb., 26, 2019, at Colonel's Island Terminal in Brunswick, Ga. (Stephen Morton/Georgia Port Authority via AP, File)
Georgia economists expect an economic downturn in the coming year, but they don’t expect it to be as severe as the nation’s.
Economists are concerned about tariffs, inflation and workforce development.
Tariffs
Many Georgia businesses are uncertain about the economic policies of the Trump administration, especially regarding tariffs.
That’s according to Christopher Fagan with Moore Colson, an accounting and advisory firm in Atlanta. President Donald Trump announced Monday that 25% tariffs on imported goods from Canada and Mexico are taking effect on Tuesday. Trump will continue adding another 10% to tariffs on imported goods from China.
Fagan said some businesses have started stockpiling.
“There’s a lot of companies right now that are importing at very high rates to try to beat the impact of tariffs,” Fagan said.
Georgia ports are already working on expanding after a busy year. Brunswick became the nation’s top port for auto cargo, and Savannah was named the fastest-growing port on the East Coast.
“While there may be retaliatory tariffs on U.S. goods, the demand for those will keep the throughput of those in our port at a consistent level,” Fagan said.
Georgia Ports Authority CEO said the authority is unsure of the tariffs’ impacts on ports but will continue to monitor the situation.
Inflation
Fagan expects tariffs to worsen inflation for consumers. Tom Smith, an economics professor at Emory University, agrees.
“When we have these tariffs, consumers are going to pay higher prices for the goods that the tariffs are impacting, [such as] tariffs on steel and aluminum. It’s going to impact us,” Smith said.
People are already feeling the weight of inflation, Smith added, and with tariffs, the prices of goods like cars and lumber could also increase.
“I don’t have a good outlook for inflation in Georgia. I think we’re going to see a significant uptick in prices and it’s going to impact consumers a bunch,” he said.
Take one of Georgia’s largest companies, Coca-Cola, for example.
“Our own Coca-Cola is going to be paying more to get rolled aluminum for their cans,” Smith said.
Eventually, those costs will reach the consumer. He said this could be problematic, considering that they are already struggling with egg prices.
According to the American Egg Board, 50 million laying hens were lost to the bird flu outbreak in the past year, while the demand for eggs increased.
A Waffle House sign lets customers know about a temporary surcharge of 50 cents per egg due to rising prices. (Marlon Hyde/WABE)
Increasing prices of materials can cause a chain effect among businesses that rely on those materials, said Sina Golara, an assistant professor of supply chain and operations management at the J. Mack Robinson College of Business at Georgia State University.
“We have a shortage of supply, and that obviously causes prices to go up, and when this thing happens, the input price of many businesses that rely on this item goes up, so it puts a lot of pressure on their profit margin,” Golara said.
The future of egg prices is not yet clear, he added.
“It’s going to take some months until we deal with the virus, plus bring in a lot more birds and hens to resolve the supply shortage. So sadly, this will probably go on a little bit longer, not forever,” Golara said.
Jobs and workforce
Rajeev Dhawan, director of Georgia State University’s Economic Forecasting Center, said inflation could also slow down job growth in the state.
He predicts Georgia will add nearly 51,000 jobs this year, 7,000 fewer than in 2024.
“It’s only in 2026, when we have absorbed in all the machinations of the tariffs and everything, that job quality becomes better,” Dhawan said.
Fagan, the Moore Colson partner, said federal immigration policy could affect Georgia’s workforce future, as some industries are already experiencing shortages.
“Southern Georgia does rely heavily on immigrant workforce, specifically when you think about the peanut farms, the cotton farms, the temper crews, things of that nature down south. So it could put a strain on those businesses with regard to labor,” Fagan said.
Peanut grower Ray Morris plows up peanuts at his farm near Leesburg, Ga., on Thursday, October 25, 2012. As the Georgia peanut harvest nears competion, farmers are expecting a banner crop. (AP Photo/Todd Stone)
The use of artificial intelligence to fill some of these shortages could be on the horizon.
“Automation has been useful specifically in cotton and peanut harvesting to be able to replace labor when needed. So there may be some sort of capital investment that those businesses may need to make to replace labor,” Fagan said.
Bright side
Dhawan forecasts further rate cuts this year, which could help Georgians trying to buy a house, pay mortgages or pay credit card bills.
“If 2025 plays out like 2024, which means moderation in inflation, rate cuts would be appropriate this year,” Dhawan said. “If the job growth weakens, as I’m forecasting by the second half, the Fed will come in and do the rate cuts.”
Georgia Ports are expanding with a number of projects planned to receive billions in investments. Electric vehicle production is underway.
Dhawan said there are signs that film production could be on its way back as well.
“There’s a big jump up in the last month that tells me that in December, things started to come back over here a little bit more on the filming industry,” Dhawan said.
