An energy shock could trigger a recession in Georgia, and the U.S. has no serious energy policy to prevent it, says Robert Sumichrast, Dean of UGA's Terry College of Business. Speaking to Buckhead Rotary, Sumichrast delivered predictions based on research by the college's Selig Center for Economic Growth.
Sumichrast says the risk of recession is imminent, and the greatest risk is in the first half of this year. The Selig Center puts the chances of a national recession at 80%, and says we may already be in it.
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Georgia, however, could escape the recession if we avoid "recession triggers" of housing, oil and continuing drought, which could put the state's economy "past the tipping point." Without those triggers, the center predicts Georgia's GDP will expand by about 2.0% in 2008.
Sumichrast doesn't see housing as the greatest threat here as in California, Florida and Washington D.C., where home prices got out of hand. The drought is a bigger threat, but the biggest is the potential from an oil supply interruption.
Sumichrast says Georgia's heavy reliance on transportation-based industry makes it especially exposed to an energy crunch.
"If a refinery breaks down, if a storm rips through the gulf again and knocks out platforms, or if a war breaks out, you can think of a lot of scenarious where we could have a supply interruption," he says. "That's what I'm more worried about."