Despite last week’s media reports hinting at a June rate hike after the Federal Reserve’s May meeting, expect Janet Yellen and company to wait until March 2017 for an

interest rate increase, according to Rajeev Dhawan of the Economic Forecasting Center at Georgia State University’s J. Mack Robinson College of Business.

“The Federal Open Market Committee dot charts are of interest to the press for their noise potential,” Dhawan wrote in his quarterly “Forecast of the Nation,” released (May 26). “These are submitted weeks in advance of the meeting and as such are purely opinions and not policy projections, resulting in confusion.”

Dhawan points to comments in the April FOMC that contradict the idea of a June rate hike.

“The FOMC said consumer sentiment was high, which is true, but it has been moderating since last fall,” Dhawan said. Combined with extreme volatility in the stock market and the political uncertainty surrounding the presidential primaries and upcoming elections, “the momentum indicator for confidence is not up, but down.”

The FOMC also pointed to household income gains as a positive, but Dhawan argues that although gains are solid compared to the Great Recession, they are still half the size of those before the downturn. Deep discounts from automakers have encouraged a dramatic increase in vehicle sales since 2014.

“This is bad news for shopping malls and retail centers,” the forecaster said, “because consumers are scrimping on discretionary spending to service their auto loans in the face of less than stellar income gains.”

As apartment building mania cools, housing demand has, also. Already a historically subpar recovery, lack of demand for and availability of affordable housing suggests waning momentum for the potential of a June rate hike.

But the key, Dhawan said, is weak business investment for the past nine months.

“Presidential election rhetoric creates uncertainty that holds back investors,” he said, “plus the damage from last year’s falling oil prices on equipment investment is showing up in growth.”

Thus, 2016 job growth will be weaker than that of 2015, he said.

Resources released by falling oil prices were funneled into sectors more dependent on consumer demand.

“As online retail sales have grown at a blistering pace, so has the need for warehouses, truck drivers and cardboard,” Dhawan wrote. “The issue here will be the strength of future consumer demand, which is a function not only of prices but also of ability to buy, also known as today’s job growth, which hinges on prior investment.”

Domestic-Based Sectors Drive Georgia’s Economy

Job creation in Georgia in 2015 was better in the education, health, hospitality, government and financial sectors than in the globally linked corporate, transportation, wholesale trade and manufacturing sectors, according to Rajeev Dhawan of the Economic Forecasting Center at Georgia State University’s J. Mack Robinson College of Business.

But Dhawan expressed concern that momentum is slowing in domestic sectors in his quarterly “Forecast of Georgia and Atlanta,” released (May 26).

“Consumer spending can keep the economy humming, but we need one more element to maintain a 10,000 monthly job growth at the state level,” Dhawan wrote. “The missing ingredient is business investment, which has been very weak for the last nine months.”

National investment dropped 1.6 percent in the first quarter of 2016, driven mostly by last year’s massive decline in oil prices. As a result, the state added 22,800 positions in the first quarter of 2016, almost half the number of jobs added in the fourth quarter in 2015.

“We also must take into account the types of jobs being created,” Dhawan said. “In the mid-1990s the economy created one high-quality tech or corporate job for every three jobs. Now, the economy creates one high-quality job for approximately every four jobs.” Thus, individual income tax growth has not been strong, he added.

This is particularly true in the Peach State, where most high-quality jobs are found in the Atlanta metro area. Due to global headwinds, the corporate sector was considerably weaker in the first quarter of 2016 than in the fourth quarter of 2015. This slowdown in growth was seen in metro areas across the country.

However, Georgia bucked U.S. trends in manufacturing employment. Nationally, manufacturing employment grew by only 1.1 percent in 2015, compared to 3.2 percent in Georgia. The reason: Georgia produces more goods for domestic consumption, including textiles and processed foods, than states manufacturing goods for global consumption.

“Given that we didn’t share in the fracking boom, we aren’t feeling the fracking bust,” Dhawan said.

Despite the slowdown in corporate job growth, construction in metro Atlanta continues to advance. Projects are taking flight near Dunwoody, Sandy Springs and SunTrust Park in Cobb County. Downtown and Buckhead also have seen increases in office projects and mixed-use development.

Housing permits for the first quarter of 2016 were up 46.5 percent, driven by a tenfold increase in multifamily construction in Cobb County and a tripling of permits in Fulton County. Dhawan expects this growth to moderate in line with national trends that have seen apartment vacancy rates move upward.

Dhawan believes 2016 will be slightly slower than 2015 for job growth.

“A gain of 2.7 percent in 2016 is slightly less than 3.0 percent in 2015,” he said, “but in 2017 we will feel the full impact of weakened investment when we grow by only 2.0 percent.”