Savanah’s economy ended 2021 on several positive notes.
The local labor market has surged above pre-pandemic levels, with tourism and hospitality employment numbers recovering faster than industry experts expected, according to Georgia’s Economic Monitor Southern University.
“We’ve outperformed the state of Georgia in economic recovery from the pandemic,” said Michael Toma, Fuller E. Callaway Professor of Economics at Georgia Southern University’s Armstrong Campus, who writes the quarterly report.
Wages are also catching up with inflation levels, which means the pressure on workers’ paychecks is easing. “The pace of the rebound is slowing, as expected, now that we are above and beyond the employment base…which was known before the pandemic,” Toma said.
But, the rapid rebound means higher costs across the board. Inflation is around 7%, a 40-year high for consumers.
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Costs also continue to rise for producers. Energy costs rose 30% and building material costs rose 24%, according to the report. This means that additional production costs will continue to trickle down to buyers’ receipts.
Wages played a “catch-up” at the end of 2021, Toma said, rising just enough to hold steady with the inflation rate rising. This basically means that workers have about the same purchasing power as they did a year ago at this time.
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One of the main themes to come from 2021 is the explosion of the labor market in all industries, especially in the logistics and business services sectors.
Growth in logistics stems from port-related activities, Toma explained, such as trucking, warehousing and distribution. The logistics sector created 500 new jobs in the last three months of 2021, according to the report.
The data aligns with real estate trends and government spending in the area: there’s more than 17 million square feet of warehouse space under construction in the Savannah area, and the Georgia Ports Authority is ready to spend about $3 billion over the next three decades to increase port capacity and operations along the Savannah River.
Business and professional services is a catch-all sector that usually constitutes business-to-business functions such as accounting, marketing, IT services, etc. This sector has exploded with growth during the pandemic, according to local labor data.
During the fourth quarter, 1,400 jobs were added in this sector. Since the start of the pandemic, 8,400 people have settled in this sector, signaling an emerging industry in the savanna region.
“I think what’s happened is that a lot of people who have been displaced from the tourism industry have re-engaged in this other sector,” Toma said.
House building slows down
An indicator of rising prices was the number of building permits issued.
The number of permits taken for construction of single-family homes fell 16% to 590 permits, according to the report. New permits jumped in the third quarter.
A drop in new permits will mean less construction activity, which means fewer jobs for plumbers, electricians and other building-related industries.
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Toma said the drop is a good sign because permits don’t mean a new home until about seven to nine months later. A drop in the number of new permits indicates that the market could be in better shape in several months, and not an indicator of weak demand at the present time.
Optimism in the housing market would be welcome in Savannah, where the pandemic has exacerbated several issues that are driving up rents, house prices and falling inventory.
Zoe covers growth and its impact on communities in the Savannah area. Find her at email@example.com, @zoenicholson_ on Twitter and @zoenicholsonreporter on Instagram.