Welcome back, Georgia.

        The Peach State, a top 10 economic performer in the 1990s, has rejoined those ranks, according to the Selig Center for Economic Growth at The University of Georgia's Terry College of Business.

        The Selig Center's annual forecast states that the Georgia economy will outperform the U.S. economy in 2007, growing by an inflation-adjusted 3.3 percent versus 2.3 percent for the nation. The state economy grew by 4.3 percent in 2006.

        But even as its economy cools, Georgia will rank among the top-performing states in the nation in the coming year, said Selig Center Director Jeffrey M. Humphreys.

        "Georgia looks to beat the U.S. economy on virtually every yardstick, whether it's employment or gross [economic] product or personal income," Humphreys said.

        Said Terry College Dean P. George Benson: "What's interesting is that we did considerably worse than the rest of the nation in the first four years of this century. We had been used to being in or near the top 10 consistently, and now we're back there again."

        In 1998, Georgia ranked seventh nationally in gross state product (GSP) growth rate, and eighth in 1999, reflective of the state's surge in the mid- to late 1990s, Humphreys said.

        Then came the perfect storm that battered the Peach State economy: the dot-com/information services implosion, manufacturing slowdown, and the 9/11-induced jolts to the transportation and hospitality sectors.

        Georgia slipped to No. 24 in GSP growth rate in 2000, No. 31 in 2001 and No. 43 in 2002, before bouncing back to No. 38 in 2003, No. 21 in 2004 and No. 14 in 2005, Humphreys said.

        "Basically, we went from being a top 10 state to a bottom 10 state," he said. "Even Rust Belt states like Michigan substantially outperformed us in 2002. But our strengths never went away -- whether you're talking about population growth or retiree in-migration or a younger work force."

        Of those hard-hit sectors, hospitality will be a major driver of 2007 expansion, with information services "poised for growth." Only air transportation and manufacturing continue to struggle.

        The Selig Center report states that non-farm jobs in Georgia will increase in number by 1.5 percent in 2007, below the 2 percent state growth in 2006 but "markedly higher" than the projected 1.1 percent gain nationally in 2007. Statewide job numbers will rise by 59,600 (to 4.14 million), with the 28-county Atlanta metropolitan statistical area (MSA) to generate 45,600 of them.

Other projections in UGA's 24th annual forecast:
        Georgia will mirror positive forces operating nationally, including an expanding global economy, rising exports pegged to a weak dollar, lower energy prices and diminished inflation.
        Gross state product will increase to $413.2 billion in 2007. (In constant year-2000 dollars, Georgia's GSP will have grown from $266 billion in 1998 to $352.8 billion in 2007.)
        Inflation will be 2.6 percent, down from 3.6 percent in 2006.
        The high-wage information services sector -- one key to Atlanta's economy -- will experience a 1.6 percent gain in jobs, termed "an important development" by the report.

        Diminished construction activity reflects the ongoing downturn in the national housing market, although the report adds that Atlanta and Georgia have not experienced the price bubble bursts seen elsewhere in the country.

        "More home-building permits are issued each year in Atlanta than in any of the nation's other major metropolitan areas," the report states. "Therefore, the deepening housing recession has the potential to damage the Atlanta metro area's economy."

        "We've just not had the same bubbles here in Atlanta or the state that places like California and Florida have experienced," Benson said. "We've also seen personal income levels rise at roughly the same rate as housing prices. In other parts of the country, housing inflation has far outstripped personal income growth."

        The Selig report forecasts personal income will increase by 6.1 percent in Georgia in 2007, only a tick below the 6.2 rate in 2006.

        Georgia is also vulnerable to high fuel costs due to its status as a regional transportation, distribution and logistics center, the Selig Center noted.

        "Georgians also are more dependent on their ... cars than are people in many other states," according to the report. "Also, since Georgia's per-capita personal income is only 90 percent of the national average, high fuel prices probably hit [consumers] a little harder here."

Atlanta growth

        The Selig Center projects job numbers will increase by 1.9 percent in metro Atlanta, compared with 1.5 percent statewide.

        Sam Williams, president of the Metro Atlanta Chamber of Commerce, said attention often focuses on such companies as Delta Air Lines Inc., which is in bankruptcy, BellSouth Corp. and Georgia-Pacific Corp., and that misses a fundamental point.

        "Half to two-thirds of the job growth here is among small and medium-sized enterprises," he said.

        Williams said it's too early to predict what 2007 will hold, but that year-end 2006 signs are favorable.

        "In 2005, we had 69,000 net new jobs, and this year we'll probably have 55,000 to 60,000," he said. "In 2000, we lost 20,000 to 25,000 jobs, the first time we've ever been negative. To go from that [low point] to a positive 69,000 ... is incredible."

Other cities

        The Selig Center also parsed 2007 prospects for Georgia's other MSAs, including:
        Savannah: To show the fastest growth, with non-farm employment to rise by 2.7 percent, edging out Brunswick (2.6 percent).
        Albany: To register its third straight year of "solid job growth" (1.2 percent).
        Athens: Job growth of 1.5 percent, the third straight year it has equaled or surpassed the state mark.
        Augusta: Job numbers to rise by 1 percent, fueled by "very solid growth in the health care, private education, hospitality and financial services sectors."
        Columbus: The outlook is "excellent," due to Aflac Inc.'s expansion, the Kia Motors plant under construction and growth at Fort Benning.
        Macon: Employment to rise by 0.7 percent, despite "some recent setbacks in manufacturing."