Georgia’s economic outlook mixed

Published 9:47 am Wednesday, December 5, 2007

ATLANTA — Home foreclosures in Georgia are up. One of the state’s largest employers, Delta Air Lines, is freezing some hiring amid weak fourth-quarter results. And fallout from the state’s drought is still rippling through businesses, from landscaping to farming.

But Gov. Sonny Perdue on Tuesday said that the state’e economy remains strong.

“The good news is: Georgia is in good shape,” the governor said at an economic outlook luncheon.

Perdue cautioned that “it’s not all roses and sunshine.” But his overall tone was upbeat as he noted that the state has a healthy $1.5 billion in its rainy-day reserve fund and has been attracting a steady stream of jobs from out-of-state and other countries.

The dean of the University of Georgia’s Terry College of Business had a less rosy assessment.

Robert Sumichrast said Georgia is poised on the brink of a recession and that for the next six months “we will be living on the edge.”

“The risk of recession is ramping up,” Sumichrast said.

He listed the volatile housing market, energy prices and the severe drought as pressure points that could trigger a recession in the state.

“The only thing standing between us and a recession is one major crisis or one unexpected shock,” Sumichrast said.

Perdue acknowledged the risks but said that overall Georgia is performing “above average” compared to other states.

“We cannot stick our heads in the sand and assume that housing troubles will not affect Georgia,” he said. But he said that when it came to the drought, Georgia would recover, as long as the state adopted a comprehensive water management plan.

He urged the Legislature to make approval of the plan a top priority. The plan is being developed by the state Water Council.

“We do have enough water in the state,” Perdue said. “It’s simply a matter of managing it properly, making smart conservation decisions and working with our neighbors.”

Perdue is in the midst of crafting his budget proposal to present to the Legislature in January. Sales tax revenue has been sluggish in Georgia in recent months.

The upheaval in the housing market has contributed to a slowdown in the state’s economy.

Still, Perdue is expected to push again for a $142 million tax cut that would benefit wealthier retirees. And House Speaker Glenn Richardson is pushing a plan that would move toward eliminating the state’s property taxes in favor of a sales tax on goods and services that aren’t currently taxed.