State economist predicts inflation will continue through end of year before prices start to fall

ATLANTA — Georgia’s State Economist is forecasting inflation to continue throughout 2022 and returning to what he refers to as normal levels at the start of 2023.

Dr. Jeffrey Dorfman is also predicting Georgia will see an economic slowdown at the end of the year but doesn’t expect to turn into a full-blown recession.

Dorfman appeared virtually at the Joint Appropriations Committee hearing Tuesday morning as lawmakers are preparing to work on the state’s new budget.

Gov. Brian Kemp officially presented his budget, which includes pay raises for teachers and state employees, a $1.6 billion refund to taxpayers and a restoration of the austerity cuts made as the state descended into the pandemic-fueled recession in 2020.

That recession didn’t prove as deep as originally forecasted. Now, the state has a $4 billion surplus the governor is using to fund the tax refund and pay raises.

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Dorfman believes the slowdown will happen as the feds wind down stimulus payments and the state’s economy begins to return to normal. He said Georgia incomes rose a whopping 8% from before the pandemic started.

“We would expect, as the economy returns to normal, incomes to drop about 2% from that elevated rate,” Dorfman told lawmakers. “We expect an economic slowdown as we start to finish FY22 and enter FY23. Not a recession, just a slowdown.”

Dorfman added he believes the inflation is fueled by high car prices, stimulus checks and higher salaries paid by employers who need employees.

“I think what we’re going to see is the inflation rate fall, very slowly, taking all of 2022,” Dorfman said. “The end of 2022 could see us back down to the 3%-4% range, and then by 2023, be back down to the 2%-3% range.”

House Democratic Caucus Chair State Rep. Billy Mitchell, (D) Stone Mountain, is hopeful Dorfman’s projections come true.

“I think as we ease out of this pandemic, we’re going to see economies just take off, not just in Georgia but around the country,” Mitchell said.

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