It warrants repeating: the performance of the U.S. economy over the past 4 years is remarkable.
Despite four years and counting of continuous adversity – the pandemic, followed by inflation, followed by the Federal Reserve’s tight monetary policy – the U.S. economy has posted decent or better real GDP growth in each of the last seven quarters and unemployment rates below 4% in each of the last 27 months.
More remarkable are the performances of the economies of Georgia and Glynn over the past four years.
Both economies were strong heading into 2020. Georgia finished 2019 with a solid 3.3% increase in real gross state product. Its labor force grew by 82,622 to 5,208,593. Its labor market was tight: 96.5% of the 5,208,593 were employed.
County output data are of dubious reliability for my taste, but experience plus data related to output that are reliable indicate that the Glynn economy was thriving ahead of 2020. Most telling is the decrease in Glynn’s unemployment rate from 3.7% in 2018 to 3.5% in 2019. A tight local labor market that becomes even tighter is a symptom of a thriving local economy.
In March 2020, the pandemic hit. It hit Georgia hard. It hit Glynn harder.
In April, Georgia’s labor force sunk to 4,946,604; its unemployment rate jumped to 12.4%. In the first quarter of 2020, Georgia’s real GSP fell at an annualized rate of 8.7%. In the second quarter, it fell at an annualized rate of 26.7%.
In February 2020, Glynn’s labor force numbered 39,237; its unemployment rate, 3.4%. In April, Glynn’s labor force numbered 36,964; its unemployment rate, 16.4%.
The spike in Glynn’s unemployment rate is no surprise. The industry hit hardest by the pandemic was leisure and hospitality – Glynn’s largest industry. Leisure and hospitality typically accounts for around 22% of total employment in Glynn.
In the fourth quarter of 2019, leisure and hospitality employment in Glynn numbered 8,453. In the second quarter of 2020, it numbered 6,008.
The two economies clawed their way through the next five months, then surged in the last three. At year’s end, Georgia’s labor force numbered 5,166,537; its unemployment rate, 5.1%. Glynn’s labor force numbered 38,847; its unemployment rate, 4.8%. Leisure and hospitality employment in Glynn numbered 7,624.
To appreciate the rebound in Georgia and Glynn in the second half of 2020, note that the U.S., which was rebounding faster than any other nation, posted a year-end unemployment rate of 6.7%.
Extraordinary measures taken by the Federal Reserve in the first months of the pandemic caused the U.S. money supply to increase, from February 2020 to February 2022, by 40.5%. That caused the 12-month rate of inflation to increase from 1.4% in January 2021 to 9% in June 2022.
The Fed began its monetary tightening to check the inflation in March 2022. By August 2023, short-term interest rates were up four to five percentage points; medium and long-term rates were up three to four percentage points. And since August 2023, that’s where rates have remained.
In years past, monetary tightening of this magnitude would all but guarantee a recession. Thus far, our current Georgia and Glynn economies seem impervious to it. Georgia’s unemployment rate fell below 4% in July 2021 and has been no higher than 3.3% since November 2021. Glynn’s unemployment rate fell below 4% in April 2021 and has been below 3% more often than above 3% since November 2021.
A final note. In the U.S., leisure and hospitality employment has yet to surpass its pre-pandemic level. In Georgia, it did so in the second quarter of 2023; in Glynn, in the second quarter of 2022.
Reg Murphy Center