Financial Update (First Quarter 2002)
Atlanta Fed Looks at 2002
hat’s on tap for the Southeastern economy in 2002? The Atlanta Fed provides some answers in its fourth quarter 2001 issue of EconSouth, the bank’s regional economics and business magazine.
According to EconSouth, Florida’s economy, which has a large service sector, performed well during much of 2001. The state’s economy — travel and tourism in particular — was significantly affected by the Sept. 11 terrorist attacks, however. With a recovery from the direct effects of Sept. 11 and continued robust housing markets in south Florida, the state should experience moderate growth in 2002.
Georgia’s economy broadly resembles the national economy, so the state’s 2002 outlook is similar to the nation’s. During the year, the fundamental strengths of Georgia’s economy, including its economic diversity, should help return the state to a respectable rate of growth.
Both Alabama and Mississippi are dependent on manufacturing. Because the U.S. manufacturing sector slowed before the rest of the economy, the two states entered a period of slower growth earlier than the nation as a whole did. In 2002, as the economy improves, the lumber and wood industry in Alabama should stabilize while producers of capital equipment in Mississippi will see renewed demand for their goods.
Louisiana has a large oil and gas extraction industry. In the first part of 2001, high energy prices provided a lift to this industry, but activity pulled back as prices fell later in the year. A continuation of low energy prices in 2002 could cause the industry to contract further, but this development should boost the state’s beleaguered chemical industry.
The 2001 economic downturn in Tennessee mirrored the national economy’s: service employment slowed, and the manufacturing sector contracted. For 2002, Tennessee should begin a gradual recovery led by the state’s auto and tourism industries.
To see the complete 2002 outlook issue of EconSouth, go to “Periodicals” under “Publications” on the Atlanta Fed’s Web site (www.frbatlanta.org).