The economy depends on trucks, trucks depend on mechanics and Anna Leontyeva’s company depends on the economy needing those trucks to keep running.
Status Truck & Trailer Repair, which recently moved its headquarters from Florida to Forest Park, provides a range of services, from transmission work to drive train fixits, on the 53-foot-long big rigs as well as smaller delivery vehicles.
The company has 20 employees, but she is hiring mechanics because demand is growing, Leontyeva said. “We are looking to double our operations within a year.”
A year ago, with high interest rates making loans more costly and inflation taking a bite out of paychecks, most experts predicted recession, but the Georgia economy — like the nation’s — kept growing. While unemployment inched up and the pace of hiring slowed modestly, the economy stubbornly kept expanding.
Now, inflation has retreated, and most interest rates have ebbed. Though some economists still caution about recession risks, there’s a new optimism for 2024 among most others. The economy will indeed slow, but will likely avoid a downturn, say a range of forecasts.
“The consumer is still pretty strong,” said economist Stephen Juneau from Bank of America. “We do think that things will moderate a little more, but we are not going to see the economy crash.”
One consumer-dependent company, Coca-Cola last week reported revenues of $10.8 billion for its fourth fiscal quarter, growth of 7% from the same period a year earlier. The Atlanta-based beverage giant predicted similar expansion for this year.
arvin.temkar@ajc.com
arvin.temkar@ajc.com
Georgia employers in many sectors say they are upbeat, with the strongest job growth in health care, hospitality and other service work.
With rates high, restaurants have been constrained by banks’ reluctance to lend, but those purse strings have been loosening and consumers have not retreated, said Lauren Fernandez, chief executive of Atlanta-based Full Course, which invests in restaurants and runs training for new restaurant owners.
“Even if their wallets are pinched, Americans are still overwhelmingly willing to eat out,” she said. “I believe there’s a lot of pent-up demand.”
Relay Payments, an Atlanta-based company that lets companies pay digitally for trucking services, continues to expect robust growth and rapid hiring, said Ryan Droege, CEO.
He frets about the price of fuel, but it’s been stable lately.
Last year, Relay Payments grew to 150 employees — up 50% from 2022, he said. “As long as the interest rates keep trending down, we’ll be fine.”
Moore Colson, which offers accounting and other financial services, has seen some clients struggle with the cost of loans for equipment and other large investments, said Chris Arnone, partner and vice chairman.
“Higher interest rates, that effect usually takes 12 to 24 months to hit home,” he said. “We haven’t finished that cycle. That may come to fruition this year.”
Still, his own company started this year with 170 employees and expects to add 20 or 30 more, Arnone said. “We are thinking it is going to be a good year for us.”
According to the state Department of Labor, Wellstar Health System last year frequently had one of the largest number of job postings on the state’s jobs site.
Though it has been criticized for closing its Atlanta Medical Center hospitals in East Point and Atlanta in recent years, the system is still growing.
“Wellstar is hiring across our health system, especially for much-needed clinical positions, and we anticipate that will continue throughout the year,” said David Jones, Wellstar’s executive vice president, although he declined to cite numbers.
There remains a “severe shortage” of doctors and nurses, he said.
Consumers account for about 70% of the entire economy. For much of the past year, news reports have often focused on inflation and recession risk while surveys showed Americans were pessimistic about the outlook.
But Gallup’s Economic Confidence Index has improved each of the past two months to its highest point in two years.
And a JPMorgan Chase Institute report last month showed that even adjusted for inflation, consumers on average had as much cash available as in 2019, before the pandemic.
That is because — after falling behind for several years — wage gains have been higher than inflation for most of the past year, said Heather Boushey, a member of the White House Council of Economic Advisers.
“We see that reflected in the consumer sentiment numbers,” she said. “People are, ‘Oh, okay, we are going to be okay.’”
Recessions happen because of an event — a spike in oil prices, a financial crash, pandemic shutdowns — and the signs of trouble usually appear first in layoffs and other job numbers, Boushey said. “We are not seeing those kinds of warning bells.”
The first to see trouble coming are often staffing firms. When the economy stalls, they often see companies using temps instead of hiring full-timers or cutting back on the number of temps.
Michael Blackshire
Michael Blackshire
But right now, the most common sign is the opposite — a shortage of skilled workers, said Amy Mangan, market director of staffing firm Robert Half in Atlanta. “We feel good about 2024.”
Unemployment rates are extremely low for tech specialists, financial clerks and lawyers, she said.
The market is still tilted in favor of workers, said Tom Leeper, vice president of Sevenstep, which does recruiting and staffing. “About 75% of companies across the U.S. say they are struggling to find talent, and Atlanta is no exception to that.”
Even where there have been cuts, like among big tech firms, the ranks of unemployed have not swelled because those skills were needed elsewhere, he said. “Seventy-nine percent of those laid off had another job in three months.”
The need for workers and the advance of technology have made it easier for companies and workers to forge non-traditional arrangements, he said.
Manufacturing stands to benefit from that flexibility, said Lloyd Avram, CEO of the Georgia Association of Manufacturers, whose members account for about half the sector’s 420,000 employees in the state. “There’s a significant percentage of the workforce looking for fractional work. Maybe four hours on Tuesday, maybe eight on Friday.”
Anything that adds to the workforce — offering daycare for parents, openness to hiring people who have criminal records — can help the sector, he said.
“The single largest challenge that manufacturers face is really the workforce,” Avram said. “We need more people. Every manufacturer is looking for talent.”
Yet in a $28 trillion-a-year economy, there are lots of complicated and contradictory signals.
Job cuts have been announced in a swatch of sectors. Sandy Springs-based UPS announced plans to cut 12,000 workers from its global workforce, targeting management ranks. Norfolk Southern said it will cut 300 jobs, or 7% of its management staff, but how many will come from its Atlanta headquarters is unclear.
Griffin-based 1888 Mills, which makes towels, linens, apparel and other textiles, will close its hometown plant, laying off 180 people, according to the company’s filing with the state. Block Inc., a California tech firm that owns payments companies like Square and Cash App and music service TIDAL, is cutting 27 jobs in Georgia, part of a much wider layoff.
While few beacons are flashing red, some are surely flashing yellow. The number of delinquencies on auto loans, credit cards and mortgages is up. Unemployment, while low, is higher than it was six months ago. And while consumer sentiment has improved, it is still pessimistic.
Georgia’s fiscal economist told state lawmakers in January that a mild recession is “more likely than not” in the first half of 2024, but he hedged.
“We have mitigating factors that should make any recession a mild one, and we may still avoid one,” said Robert Buschman, a longtime Georgia State University economist.
A survey by Duluth-based Primerica, showed 72% of clients said their incomes have not been rising as fast as inflation, said Amy Crews-Cutts, a consulting economist with the financial services firm.
Even those with wage hikes now besting inflation went through more than a year where they accumulated debt, she said. “I don’t see how the consumer spending spree can last much longer. All the signs I see point to recession.”
Still, many companies still have to bet on the future.
“Of course, we are nervous about this year because we made some big investments,” said R.G Lamar, chief executive of Stuckey’s, the Wrens-based and iconic convenience store and candy chain.
With about $15 million in revenue, the company is on the cusp of profitability, but it’s also saddled with rising costs for expenses, payroll, materials and debt. Interest rates are a concern, Lamar said. “At a lower interest rate, it looks a lot better.”
Business is for optimists, though. “We are expecting rapid growth,” he said. “In our next five years, I would expect to double our workforce.”
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To forecast recessions, economists sometimes rely on the Sahm Rule, which measures rises in the jobless rate.
“I’m a little less worried about it triggering than I was last quarter,” said economist Claudia Sahm, who originated the rule when she was working at the Federal Reserve. “We’ve just been rebalancing the economy.”
But if the Fed takes too long to start lowering rates, companies might start cutting back, and the layoffs could start, she said. “And if you lose the labor market, you lose the consumers and then you are done.”
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