The Albany Outlook
Assuming that the U.S. economic recession is mild and that Georgia’s economy manages to keep its head above water, the Albany MSA will add about 400 new jobs in 2008.
As always, there are headwinds and tailwinds. Albany’s economy will owe much to six drivers. They are: projects already in the economic development pipeline; Albany’s increasing role as a regional healthcare center; the government cluster, including the Marine Corps Logistics Base; manufacturers of consumer staples, such as food, beverages and basic paper products; the hospitality industry; and retiree-based economic development.
The housing recession and its ripple effects will be the biggest threat to economic growth in 2008. That will hold true for the nation, for Georgia and for Albany. Permits to build single-family homes in the Albany MSA dropped by 6 percent in 2006 and by 29 percent in 2007. This year, I expect another 20 percent drop.
Despite the drop in new construction, I don’t expect home prices to decline dramatically in Albany. At worst, the value of existing homes will depreciate by several percentage points. Single-family homes in Albany simply are not overpriced. The most recent analysis by National City Bank and Global Insights backs up that statement. After considering factors such as household incomes, population densities and historical price premiums, the analysts found that the actual selling prices of single-family homes in Albany in the third quarter of 2007 were only 1.2 percent above their expected market value.
From 1990 through 2007, the Albany MSA’s population grew by 6,600 – that’s a 4 percent gain in seven years. In comparison, the U.S. population grew by 7 percent. Georgia’s population grew by 16 percent. Albany’s population of people in their prime home-buying years (ages 25-54) grew by only 1.4 percent.
One silver lining, however, is that Albany’s retiree population is growing four times faster (16 percent) than the overall population and more than 10 times faster than the working age population. So, homes built to meet the needs of retirees should sell fairly rapidly.
Outside of housing and its ripple effects, however, things actually are not that bad. Several forces will be working to push Albany’s economy forward in 2008. Projects already in the economic development pipeline will be a major source of growth. Senior Life recently opened its new call center, creating between 75 and 100 jobs. Cooper Tire has announced it is hiring up to 100 additional employees to manufacture a new tire model. Proctor and Gamble announced that it will add a new tissue and towel converting line. Miller Brewing will be adding Foster’s Lager to its lineup.
Albany’s increasing role as a regional healthcare center will be a plus. Healthcare providers will benefit from fast- paced growth in the population of older consumers who tend to spend larger proportions of their incomes on wellness. Also, people will continue to purchase medical services even as the economy slows. Early last year, Regency Hospital Company announced plans to build a 33-bed long-term acute care hospital within the Palmyra Medical Center. If that announcement bears out, the facility will extend the range of locally available healthcare services.
In 2008, Albany will owe a lot to its above average share of government jobs, including those related to the Marine Core Logistics Base. Government accounts for nearly one out of every four jobs in Albany (23 percent). Government jobs provide resilience during an economic slowdown or a recession. Another stabilizer is that much of the manufacturing base is geared toward basic consumer staples.
Since 2002, Albany’s leisure and hospitality industry has generated jobs at a rate more than three times faster than the overall economy. That’s partially because there has been, and continues to be, extensive redevelopment of downtown Albany’s riverfront. A number of new hotels have opened, including the Hilton Garden Inn. Such developments increase Albany’s appeal.
Albany is in a good spot to intercept retirees – and businesses – as they leave Florida.
What’s the bottom line for the Albany area? The economic outlook for Albany is just OK, because the current condition of the U.S. economy can very accurately be described as “recessionary.” And, even if Georgia’s economy dodges a technical recession, it may still feel like a recession.