Economy: Slowing But Not Stopping
In 2023, I expect a mild recession for both the national and state economies, but growth will slow rather than stop in Savannah. The metropolitan statistical area (MSA) will add jobs this year, but fewer than in 2022. Let’s call it a slowcession instead of a recession. The bottom line:
Savannah will dodge the 2023 recession.
Savannah’s strong economic performance will reflect several factors. The city’s large tourism industry will post impressive gains compared to a previously depressed base of activity. It helps that Savannah’s leisure and hospitality industry is tilted toward domestic leisure travel rather than business or international travel.
Job growth would be even faster if not for labor shortages, especially in low-wage industries such as hospitality and retailing. Many economic development projects that were announced over the last few years will provide a solid push to the area’s growth. For example, the 2022 announcement that Hyundai Motor Group will build an electric vehicle manufacturing facility in Bryan County highlights the creation of about 8,100 jobs. Suppliers to the Hyundai plant are already announcing large-scale investments.
WebstaurantStore recently announced it will build a new distribution center in Bryan County, creating 213 new jobs. Last year, Serena & Lily, a high-end furniture company, opened a distribution center at the Georgia International Trade Center on Highway 21 in Rincon, creating 75 jobs. In late 2021, Lineage Logistics announced it will build a temperature-controlled storage facility near the Port of Savannah that will create 65 jobs. Also in late 2021, Celadon announced it will open its North American headquarters and a state-of-the-art recycling and advanced manufacturing facility in Chatham County, creating 117 jobs. And Amazon announced plans to build a high-tech, state-of-the-art fulfillment center in Savannah that will create 1,000 full-time jobs.
Additionally, Igneo Technologies announced plans to open its first U.S. electronics recycling facility at the Port of Savannah, creating at least 150 jobs.
Savannah’s unique ambiance and transportation infrastructure make it an attractive place to live and do business. Retirees will continue to be an important force powering and diversifying the region’s economic development, but the Savannah area will benefit from the fact that its population is increasing in all age groups. Those moving to the area – as well as existing residents – have a variety of education levels. At most levels of educational attainment, the workforce is fairly well balanced, but there are too many people with graduate degrees.
Operations at the Port of Savannah support manufacturing and foster growth of Savannah’s logistics, distribution and warehousing industries. FY2022 was a record breaker for the port, with container volumes 8% higher than in the previous fiscal year. In the Savannah MSA, Georgia’s ports support over 59,000 jobs and the statewide economic impact is 561,087 jobs.
Recent and proposed infrastructure projects at the port position Savannah’s economy to benefit from substantially higher container traffic. Massive amounts of new container capacity will provide new storage options for customers and accommodate future growth.
The completion of the Savannah Harbor Expansion Project enables substantial long-term growth of the port, and the Mason Mega Rail project doubled the port’s rail capacity, allowing it to tap into new markets.
Savannah aspires to become a premier destination for national conventions, trade shows and meetings. The industry’s growth reflects substantial investments in the area’s infrastructure, including new well-situated hotels and the expansion of the Savannah International Trade and Convention Center on Hutchinson Island, which will double exhibit space, add a large ballroom, add many meeting rooms, add parking and make other improvements. The expansion may be completed by late 2023.
As of mid-2022, single-family home prices were 45% above pre-pandemic peak levels. Existing single-family home prices in the Savannah MSA increased by 28% between the second quarter of 2021 and the second quarter of 2022, which is the second-largest gain posted by any of Georgia’s 14 MSAs. Home prices and new home construction are likely to decline slightly in 2023.
Exports account for 21% of the Savannah MSA’s GDP and Savannah ranks as the 25th most export-dependent of all 403 U.S. MSAs.
The long-term economic outlook here is excellent, but any further retreat from globalization or moves towards protectionism will be a headwind.