Southeastern forecast: return to growth in New Year: the Southeastern economy suffered the effects of competition, declining demand for manufactured goods, shrinking business investment and a sharp reduction in travel-related activities during 2001. For 2002, a gradual recovery is on tap for the region, but growth is likely to be slower than what was the norm for the latter part of the 1990s - Regional Focus

EconSouth, Winter, 2001 by John Robertson, David Avery, Whitney Mancuso, Navnita Sarma, Gustavo Uceda

From the high levels observed in 1998, nonresidential construction in Florida slowly declined over the last three years. Office and industrial vacancy rates rose in the first three quarters of 2001 in key markets such as Jacksonville, Miami, Orlando and Tampa. Sublease space is prevalent in most markets, and absorption has been weak. With considerable construction already under way, new construction activity has slowed considerably and will continue to be moderate in the coming year.

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GEORGIA

FACES SUBDUED GROWTH AS SERVICES SLUMP

Georgia's economy broadly resembles the nation's, so the developments in Georgia in 2001 and the outlook for 2002 are similar to the nation's. During 2002, the fundamental strengths of Georgia's economy should help return the state to a respectable rate of growth, but that process will likely be gradual, and growth will be more subdued than in the late 1990s.

Services and tourism feel the squeeze

Georgia's usually robust miscellaneous services sector weakened during 2001 mainly because of a shrinking business services component. Employment in services grew by only 0.5 percent from the third quarter of 2000 to the third quarter of 2001 as opposed to over 6 percent in each of the previous two years.

Employment levels in business service firms, which make up nearly 30 percent of total services employment, declined by almost 9 percent during the year as high-tech service providers trimmed payrolls or closed facilities in response to declining demand or increased competition. For example, Cypress Communications, an Atlanta-based telecommunications company, cut 200 workers, AT&T Broadband laid off more than 300 Atlanta workers and Atlanta-based CNN laid off 400 employees. Amazon.com closed its distribution center in McDonough, eliminating almost 450 jobs. Temporary staffing firms that provide personnel to high-tech employers also cut staffing levels.

Georgia's tourism and hospitality industry slumped following the Sept. 11 attacks. Hotel occupancies in Atlanta dropped, and job losses in the industry mounted. Although there were no cancellations of major conventions in 2001, attendance was down appreciably. Some larger conventions that had been held in Atlanta in the past had already been lost to other cities, such as Las Vegas, because of existing space constraints. The continuing expansion of the World Congress Center will help lure more large-scale conventions to Atlanta in 2002, and occupancies for the city's almost 90,000 hotel rooms should rebound. A recovery in leisure travel will be led by a recovery in confidence, whereas an increase in business-related travel will follow improved economic conditions.

The performance of other service providers was more encouraging during 2001. Despite two large food retailers shuttering stores in Atlanta in 2001 because of stiff competition, retail employment in Georgia grew by about 10,000 people through the third quarter of the year. In addition, the large health services and educational services industries added jobs over the year, with employment up almost 4 and 9 percent, respectively; the strong demand for workers in these areas will likely persist into 2002.