It appears that, after outperforming the nation as a whole for almost four years, the Atlanta economy has lost considerable momentum since early 2007.

Since June 2008, year-over-year job growth in "The Big Peach" has fallen from +0.7% to -1.8%. Meanwhile, the unemployment rate has edged steadily higher — from 3.9% in April 2007 to 6.5% in September 2008.

Major contributors to the 24,000-jobs decline in employment over the past year were the construction industry, which has shed 13,400 jobs, and manufacturing, which is down by 10,500. The services sector has also dropped just over 20,000 jobs during the past year, despite an 8,100-job increase in employment in education and health services.

The near-term prospect of further declines in employment locally and across the country as a whole will depress economic activity in Atlanta. This view is reinforced by the fourth-quarter 2008 Manpower Employment Survey for Atlanta.

Spending in Atlanta will also be severely constrained over the next two to four quarters by a restrictive lending climate and a significant drop in household wealth, due to declining house prices.

According to the Case-Shiller House Price Index, house prices in Atlanta have fallen by 9.5%, a figure lower than Case-Shiller's composite index of 20 metropolitan areas, which was down -17.4% in September 2008. The -9.5% figure indicates that the metro area's housing market is healthier than most and consequently should recover more quickly than the rest of the country, possibly early in 2010.

With respect to commercial construction, Atlanta's chronically high office vacancy rate, together with a significant slowdown in office-based employment, will probably depress new office construction well into 2010, according to Property & Portfolio Research.

However, Atlanta's strategic location, dynamic education and health services sectors and highly-educated workforce guarantee a strong longer-term outlook.