Georgia’s economy will see growth slowing to about 1.5% in 2026.

That slow rate of growth, along with some economic headwinds facing the nation, will keep the risk of a recession at an elevated level next year.

“In 2026, Georgia’s economy will match the U.S. economy with respect to the pace of GDP and job growth,” University of Georgia Terry College of Business Interim Dean Santanu Chatterjee told the crowd gathered at Atlanta’s Georgia Aquarium for the kickoff of the 2026 Georgia Economic Outlook series. “That said, both economies will experience positive but slower growth.” 

The Georgia Economic Outlook is hosted annually by the UGA Selig Center for Economic Growth, a public outreach unit housed in the Terry College of Business. For 43 years, Selig forecasters have produced an economic forecast report for the state and its metropolitan statistical areas. 

Labor force and international trade

In 2025, Georgia had enough economic momentum to overcome the headwinds facing the national economy. Near-record population growth in the years following the pandemic, a full pipeline of new factories and logistics businesses and a business-friendly environment helped keep Georgia growing faster than average over the past four years.

But a slowdown in population growth, a decline in the size of the labor force and uncertainty over trade policies have weakened the state’s hedge against national economic headwinds.

Inflation

Analysts project that inflation will peak at around 3.5% during 2026 before retreating to 3% in 2027. Because of an elevated risk of recession, the Federal Reserve will likely ease monetary policy even though inflation will remain higher than its 2% target.

The Selig Center for Economic Growth expects the Federal Reserve to lower the federal funds rate to 2.75%, down from 4.5% at the beginning of 2025 and down from 5.5% in 2024.

Job market

While the unemployment rate in 2026 will increase slightly to average 4.1% across the year, the larger concern is a slowdown in new job creation, Chatterjee told the crowd. He further added that while growing investment in artificial intelligence and data centers provides an economic boost in terms of investment, it does create some uncertainty for future job creation.

Real estate 

Commercial and residential real estate will remain stagnant over the next year. 

The affordability of single-family homes is at an all-time low, and homeowners are loathe to sell if it means leaving behind their lower mortgage rates. With fewer new families moving into the state, the housing industry will remain in a recession through 2026. 

Single-family homes — whose prices rose 59% nationwide in the years following the pandemic — are overpriced, and analysts predict 2026 will be the year home prices start to come down. While prices will come down, this correction will not resemble the home value losses seen during the Great Recession. 

“We do not expect a repeat of the housing bust that accompanied the Great Recession because there will not be enough distressed sales to drive home prices down drastically,” Chatterjee said. “Plus, there is tremendous potential for stronger and more active housing markets once the economy returns to trend growth. Home ownership is fundamentally more important to a larger proportion of the population than prior to the pandemic.” 

Silver linings 

Despite the slower growth projection, Georgia remains well positioned to bounce back once national conditions favor growth again. 

“Georgia’s economy is resilient and well diversified with a workforce with wide-ranging skill sets, a business-friendly policy environment and a world-class higher education network with top universities and trade schools,” Chatterjee said. “This gives us much hope for the future.”