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Is the glass half full or half empty? It’s hard to say, but the one thing I can be certain of is we’re set for more uncertainty ahead. The good thing about uncertainty is it makes for opportunities ahead. I encourage you all to not ask the question about whether the glass is half full or half empty, but really what do you do with the water that is in the glass? – Heidi Learner

Glass Half Full

Heidi Learner, Chief Economist at Savills-Studley, kicked off the 2017 Economic Outlook with good news of the robust stock market, healthy growth in per capita income as a result of job growth, corporate and consumer sentiments being at record highs, and healthy bank loan growth.

For the first time since the end of 2014, equities are experiencing the first period of year on year growth for two consecutive quarters. As a result, household balance sheets are in great order, there’s been a rebound in home prices with gains fully offsetting losses incurred during the recession, and consumers are in a period of high spending.

High consumer spending is driven by high equities, but is also influenced by market optimism and a decline in unemployment, leading to a rebound in wage and salary incomes. This is a particularly welcoming fact, due to consumption growth typically making up 2/3 of the total growth of GDP. This can be seen most notably in Atlanta, thanks to a rising number in office employment for the region. Atlanta’s surge in office-using jobs lies in contrast to slow but stable office-using job growth across the United States.

Glass Half Empty

On the other side of the coin, there is some cause for pause. While it can be seen as a positive that loan growth is healthy, it’s growing a little too rapidly for comfort when it comes to auto loans and student loans. In terms of consumption, spending might be robust but it’s mainly in the service sector, with retail spend lagging, as well as corporate spending on capital goods in decline.

Even more alarming is the corporate non-financial sector’s ratio of debt to GDP reflecting recession levels. Learner makes it clear this is not a call for panic or declaration of recession, but this large amount of corporate leverage is something to keep an eye on. This could be, in large part, due to many corporate profits coming from repurchasing shares. 119 out of the 500 companies in the S&P spent more on shares buybacks than they generated in earnings for Q3 of 2016. One reason for the high buyback levels could be that corporate investments are sluggish, not just in physical structures but also in intellectual property. Though you could argue companies are investing in human capital rather than hardware and software, overall output is not increasing, so it’s hard to tell if those human capital investments are profitable.

Broadening the scope of how we look at the current state of economics, Learner notes despite the dollar being high, this isn’t necessarily the best case scenario for our economy. With a high dollar, importers are paying higher prices for our exports, making the United States less competitive in the global market. However, the jump in the dollar right after the 2016 election has leveled out. To wrap up an international look, Learner shares that 43% of U.S. bonds are owned by foreigners, China and Japan being the two largest creditors, and their recent selling is driving up financing on trade deficits for the U.S.

The vision is, we want to be positioned as a top-tier global market. The truth of the matter is Atlanta has a lot of the assets that make us a top-tier global market. The other part of the truth is there are some things that we’re missing. The real problem lies in the fact most people don’t know about the assets that do make us a top-tier global market.  – Hala Moddelmog

State of Atlanta

President & CEO of the Metro Atlanta Chamber of Commerce (MAC), Hala Moddelmog, introduced MAC by sharing its mission: to be a catalyst for a more vibrant and prosperous region. Moddelmog points to a lack of awareness as the overall hurdle for MAC—people simply don’t know the assets Atlanta has to be a top tier market.

The three broad tasks MAC undertakes to overcome the barriers Atlanta currently experiences, as well as what each task looks like in action, include:

  • Helping recruit, retain, and expand companies located here in Atlanta
  • Enabling sustained economic growth through sound public policy
  • Marketing the region to attract and retain talent; most importantly, millennials=

Recent Wins for MAC

Along with a recent history of strong service-oriented exports coming from Atlanta, Moddelmog touts recent tangible victories for the Metro Atlanta area. First, Atlanta is now a designated “Knowledge Capital of the World,” an honor that has roots in tons of professional capital being produced from Atlanta’s many prestigious universities. Second, Atlanta is gearing up for three major sporting events; the College Football National Championship in 2018, the Super Bowl in 2019, and the NCAA Final Four in 2020.

Business developments in Atlanta are moving away from traditional sectors and into the digital world. Large companies with long histories such as GE, Honeywell, Kaiser, and Keysight are choosing Atlanta as the city to set up their digital hubs. The reasoning is simple—these companies are looking to enter the modern digital age by pulling talent from Georgia Tech and embracing the Midtown Atlanta jungle effect. As companies make the move into the future, choosing Atlanta as homebase, Moddelmog notes Atlanta is following along with them, rebranding itself as an innovative cultural center.

Looking Towards the Future

With the stage set for a bright future, Moddelmog shares industries that MAC has its eyes on to continue developing within the Metro Atlanta Market:

  • Financial Tech
  • Cyber security
  • Mobility & the Internet of Things
  • Digital Media & Entertainment
  • Health IT

Fostering Talent and Community

To actualize the future that MAC has its eyes on for Atlanta, they are focused on building a strong startup community and fueling the talent that will be needed. Moddelmog is careful to make the distinction between Atlanta’s future and other cities’ current technology hubs: We are not going to be Silicon Valley, and we don’t want to be. Our startup narrative will be completely original to Atlanta.

On the talent side, MAC is seeking to position Atlanta as a top place to be for young professionals, but also for essential economy workers (construction, plumbing, etc.). To do so, MAC isn’t simply promoting the good things already happening inside the city, but also fixing known problems, such as income disparity, income mobility, educational gaps, and transit needs.

For startups, MAC is teaming up with universities and corporations, helping connect investors to talent. There are 24 corporate innovation hubs on college campuses in the city, focused on fostering research and development with young talent. ChooseATL is a program associated with MAC that targets interns and organizes mixers and events for them to do interesting activities around the city. In a more co-opted effort, ENGAGE is a group made up of 10 companies, working together to privately fund green lighting of startups that will help with Atlanta’s technological spring. Atlanta’s competitive advantage is centered around the fact that customers are here and what startups are selling are “go to market” products.


CFOs are concerned about talent—what would you say to those concerns?

This is a problem that hasn’t been seen in the past, which is retaining talent in Atlanta from local universities. This became a problem because Atlanta was disproportionately hit during the recession because it is such a real estate town and so all the jobs disappeared. Millennials want that work/life balance, but they also have to have a job. Now that jobs are back, we need to show millennials how work/life balance can be enabled and how Atlanta is a top city in line with New York, or Boston.

It’s important to note that, as much as CFOs are worried about talent, CEOs are even more concerned. Talent is their #1 issue and that’s what they’re coming to MAC to discuss, so we can help them solve this problem. Part of it is looking at talent differently, such as supporting our technical colleges to increase our number of builders/makers, and the other part is reaching talent in deliberate ways, like featuring the largest job board in the history of SXSW at this year’s festival.

How are Atlanta Public Schools affecting where companies move to in the city?

It is a problem. Company owners and high-level managers will mostly send their kids to private schools, but they do care about the rest of their employees and so companies will settle to where the good schools are, such as Gwinnett or Cobb. It’s not an overnight cure, and fixing this problem is completely data bound; all changes are made based on that data. One of the biggest examples of data that affects changes with public schools is third grade reading levels. Therefore, the first thing to tackle is upping the number of third graders who can read.

What is happening in new business formation from a policy perspective on a broader scale, both outside of Atlanta and outside of the tech sector?

We’re at historic lows of new business formation. To fix this, we need to reduce regulatory burdens from crushing the allowance of permits and licensing in starting a new business; we also need to create programs locally that invest in businesses to help them start up. It’s important to note, all these answers lie locally, not nationally.

On a local level, MAC has 5-7 companies we’re hand holding as they grow. Growing new businesses is important because, in general, large companies shrink as they get more productive, but new companies grow. Getting big companies to move here is great, but figuring out what we can do to help other companies grow is just as important. The more we can help grow other companies, the more the service business and professional business grows.

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