In a Depression-era novelty song, the performer proclaimed "prosperity is just around the corner," only to be followed by the retort "what we'd like to know is which corner?" Released in 1932, the song summed up the frustration with the then ongoing depression. On the heels of a recession 75 years later, many businesses and households share a similar sentiment. The challenges of the ongoing economic recovery are simple to understand.
First, one needs to acknowledge the depths of the 2008-09 recession. As measured by the reduction in non-farm payrolls, the "great recession" was the deepest of the post-World War II era. Between January 2008 and February 2010, payrolls contracted by more than 8.7 million jobs. This drop in employment, just over 6 percent, was more than twice the job loss in any previous post-war recession.
Locally, the job loss was even more pronounced, with non-farm payrolls falling by 9 percent in the metropolitan Atlanta area. Atlanta shed jobs faster than the national economy reflected the exposure of our community to the correction in real estate and financial services industries - industries that are themselves dependent on long-term employment and population growth.
Second, while the national and local economies have been adding jobs since early 2010, the pace of job creation has been timid. Since employment began expanding in March 2010, the national economy has added back nearly 5.9 million jobs. In the first three years of post-recession job creation, employment has risen by a modest 4.5 percent or by an average of 159,000 jobs per month. At the current pace of creation, it will be late 2014 before non-farm payrolls surpass pre-recession levels.
By way of comparison, the first three years of job creation following the deep 1982-83 recession, employment grew by over 11 percent. At the strongest part of that recovery, the 12 months ending in August 1984, payrolls growth averaged 408, 000 jobs per month. If adjusted to reflect the size of our current economy, this would translate into nearly 600,000 jobs per month.
Finally, the sluggish job creation of the past three years feels even worse to local workers, because we as a community are accustomed to outperforming the nation in terms of growth in output and employment. During the decade of the 1990s, nationwide employment grew at a 1.8 percent annualized rate. Employment in the Atlanta area grew by 3.5 percent - nearly twice the pace. Cobb County was a significant contributor to, and benefactor of, that growth. While it was generally acknowledged that Atlanta was unlikely to outperform the nation by the same margin going forward, the local performance of the 1990s certainly set a psychological benchmark for growth in subsequent decades.
There is no doubt that many of the factors that made Atlanta and Cobb County an attractive place in which to live and conduct business over the past four decades are still in place. However, it is also important to acknowledge two key points.
First, the economic competition among cities and states in the Southeast has become more competitive in recent years.
Second, if population growth in our region does not outperform the national average by a significant margin, it has implications for the mix of industries in our economy. Specifically, there may be a shift in the distribution of activity between sectors that support growth in the region and sectors that produce products consumed outside the region. The implications of both points for local policy are worth considering.
Roger Tutterow, Ph.D, professor of economics at Mercer University, grew up and lives in Cobb County.