Tuesday, December 07, 2004

Highlights of Ratajczak’s latest economic forecast

Economic forecast, Gwinnett Daily

By Douglas Sams

DULUTH — Metro Atlanta can expect neither an economic boom nor bust next year, and job growth will come mainly from smaller firms, a leading economist said on Monday.
In his annual reading of the economic tea leaves before the Council for Quality Growth, Georgia State University economics professor emeritus Donald Ratajczak said Atlanta may add up to 55,000 jobs by the end of next year, and perhaps 70,000 by the conclusion of 2006, when the region’s top 20 employers decide to “join us in the job growth.”
Ratajczak described the state economic picture as “three Georgias” — firms with 20 employees or less are adding the most jobs, and middle-sized companies are neither booming or busting. However, recent struggles at Atlanta-based giants Coca-Cola, CNN, BellSouth and Delta are slowing employment growth that has increased by only 14,000 over the same time last year.
“There are no winners right now in that big crew at the present time, and that is what’s holding us down,” Ratajczak said.
The well-known economist has spoken to the Council For Quality Growth for at least the past 10 years, and he has become a favorite among the builders, bankers, attorneys and engineers in the crowd for blending hard data with a sense of humor.
The highlights of Ratajczak’s latest economic forecast included:
n Housing: Metro Atlanta has an excess of million-dollar homes on the market, but that is not creating a housing bubble. Ratajczak said 32 percent of metro Atlantan’s disposable income is supporting their housing costs, only slightly higher than the national average. However, in cities such as San Francisco, that number is 55 percent.
n Offices: After hitting 21 percent vacancy in the second quarter, construction has slowed, and occupancy is up. “The worst is over,” Ratajczak said.
n Interest rates: The Federal Reserve will do nothing drastic, but it is likely to raise interest rates gradually in increments of one-quarter percentage point over the next year. However, Ratajczak does not see the rates rising higher than 3.5 percent. Many economists expect the Federal Reserve will raise the key interest rate by one-quarter percentage point to 2.25 percent when it meets next Tuesday.
n Oil Prices: Oil prices may fall to about $35 in the coming year, Ratajczak said. Oil prices per barrel rose to $43 on Monday.


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