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Slow But Steady
Ratajczak: Georgia’s economic battleship gradually changing course toward recovery, but still heading into tall waves slowing its progress
by Walter C. Jones, Morris News Service
December 11, 2009
Georgia's economic battleship is gradually changing course toward recovery, but it's still heading
into tall waves slowing its progress, says noted economist Donald Ratajczak."The ship is turning.
It's starting to get in the right direction," says the former director of Georgia State
University's Economic Forecasting Center.
The pro-development Council for
Quality Growth hired the nationally recognized prognosticator to speak at its twenty-fifth annual
meeting in a part of Gwinnett County where the group's members engaged in frenzied real estate
speculation before the recession.
Residential real estate is beginning to show signs of working through the glut of homes,
Ratajczak says. For example, the steady of pace of weddings indicates households are still being
formed, leading to demand for housing. And a recent rise in furniture sales suggests that current
homeowners are remodeling rather than upgrading in the short run.Commercial real estate, though,
has bigger problems. If companies aren't hiring more workers, they don't need offices and factories
to put them in or warehouses to store what they produce.
Large companies have been building cash, strengthening their balance sheet and gaining
productivity as a result of shedding their marginal operations and delayed hiring."Productivity
gains are carrying us forward. That's going to give us a strong growth in earnings," he says,
adding that the stock market would likely surge 18 percent higher.
However, small companies aren't hiring because they can't get loans to cushion sputtering
cash flow. Even their credit cards have lower limits, eliminating another liquidity option for
entrepreneurs.
"We've got to put more liquidity into small businesses. People don't understand how much that
has collapsed," he says. "I don't know an easy solution to this."
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