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Georgia’s Economic Conditions and Outlook. Fiscal Management Council Sept. 23, 2018 Ken Heaghney. Agenda. Georgia’s Financial Condition Georgia’s Economic Outlook. FY 2018 General Fund Revenues Totaled Over $24 Billion. FY 2018 Revenue Growth Exceeded Plan.
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Georgia’s Economic Conditions and Outlook Fiscal Management Council Sept. 23, 2018 Ken Heaghney
Agenda • Georgia’s Financial Condition • Georgia’s Economic Outlook
FY 2018 Revenue Growth Exceeded Plan 2.3% Revenue Growth Required in FY 2019 to Reach Budget Target – YTD growth equals 5.2%
RSR Balance Right at $2.5 Billion Before Adding Agency Lapse – A Record High
Georgia’s Strategy for Adjusting to Federal Tax Reform – HB 918
Agenda • Georgia’s Financial Condition • Georgia’s Economic Outlook
Economic Trends – Key Global Factors #1 – Synchronized Global Growth of 2016 and 2017 is Ending
Economic Trends – Key Global Factors #2 – Consumer Price Inflation Is Ramping Up
Economic Trends – Key Global Factors #3 – Global Interest Rates have Decoupled in Response to Local Conditions
Economic Trends – Key Global Factors #4 – Trouble in Emerging Markets
Economic Trends – Key Global Factors #5 – US Fiscal Policy will Boost GDP Growth in the Near Term Discretionary fiscal policy contribution to real GDP growth, % Source: Moody’s Analytics
US and Georgia – Key Trends • Labor markets are tight but where is the wage growth? • Strong consumer spending is supported by underlying fundamentals • Business sector is humming • Housing is still in recovery mode with relatively moderate growth • Financial conditions are tightening
Georgia Job Growth Reasonably Well Diversified Across Sectors
Inflation has Ramped Up But is Still Below the Policy Guideline
Summary • Georgia’s financial position is strong with record reserves and good revenue growth. • US economic growth cycle is almost ten years old and still going strong; federal fiscal policy is likely to help sustain momentum. • Overall, US and Georgia economies are stellar: • Tight labor markets, • Consumer spending growth with solid finances, • Business sector expanding rapidly. • Risks to the outlook are primarily medium term – interest rates / yield spread, trade policy.