Economic Commentary
By Simon Medcalfe, assistant professor, Hull College of Business, contributing writer
In November, the Augusta LEI increased 0.7 percent from October. The index is up 7.2 percent from November 2009.
Residential permits (through November 2010) are higher than for the whole of 2009. This bodes well for construction and related industries going into 2011. However, permits are still only at about two-thirds of the level achieved in 2005. Unemployment insurance initial claims fell sharply at the beginning of 2010, increased slightly in the summer months, then decreased in the fall. This pattern was reflected in the unemployment rate.
Concerns in the summer of a double-dip recession would seem to have decreased. Job openings in the South have steadily increased over the last year; however, job openings in Augusta declined over the year. This, however, may just be the natural seasonal pattern, and I will be looking to see more job openings in the spring of 2011 to indicate a robust recovery. The Dow Jones Industrial Average (which is highly correlated with an Augusta Stock index) was up 11 percent last year. Stock markets tend to rise on increased expected earnings of businesses.
This would seem to indicate a rosy outlook from investors. Commercial permits have been generally on an upward path in 2010, indicating firms are optimistic about the future. Employment also has been on a gradual upward trend. From September 2009 through November 2010, the local economy generated a net increase in employment of 3,200. At this rate, the Augusta MSA will be back at prerecession levels of employment by the end of 2012. By contrast, the latest estimates suggest the national economy will achieve that target only by the end of 2016.
Most of the economic variables are heading in the right direction, so overall, I am cautiously optimistic for Augusta in 2011. Augusta is in a far better position relative to many other cities to grow in 2011.
