Georgia's economy is projected to keep growing in 2026, but economists warn the pace will slow as national economic pressures raise the risk of a recession, according to a new University of Georgia outlook.

Forecasters at UGA's Terry College of Business believe Georgia's economy will grow by about 1.5% in 2026, a slowdown that mirrors expectations for the overall U.S. economy. While growth is still expected to remain positive, the softer pace means the risk of a recession will stay elevated next year.

"In 2026, Georgia's economy will match the U.S. economy with respect to the pace of GDP and job growth," said Santanu Chatterjee, interim dean of UGA's Terry College of Business, speaking at the kickoff of the 2026 Georgia Economic Outlook at the Georgia Aquarium in Atlanta. "That said, both economies will experience positive but slower growth."

The annual forecast is produced by the UGA Selig Center for Economic Growth, which has tracked Georgia's economy for more than four decades.

Georgia entered 2025 with strong momentum, helping the state outperform the national economy in recent years. Near-record population growth after the pandemic, a steady flow of new factories and logistics facilities, and a business-friendly climate helped fuel faster-than-average growth.

But forecasters say that the cushion is thinning.

Slower population growth, a shrinking labor force, and uncertainty around trade policies are weakening Georgia's ability to stay ahead of national economic pressures. Those factors are expected to weigh on growth through 2026.

Inflation, interest rates, and jobs

Analysts expect inflation to peak around 3.5% in 2026 before easing to about 3% in 2027. Because the risk of a recession remains elevated, economists believe the Federal Reserve will likely begin easing monetary policy, even though inflation will still be above the Fed's 2% target.

The Selig Center expects the federal funds rate to fall to about 2.75%, down from 4.5% at the start of 2025 and 5.5% in 2024.

Georgia's unemployment rate is projected to tick up slightly, averaging 4.1% in 2026, but Chatterjee said the bigger concern is a slowdown in new job creation. While investment in artificial intelligence and data centers is boosting capital spending, it also brings uncertainty about how many long-term jobs those projects will ultimately create.

Housing and real estate 

Commercial and residential real estate are expected to remain largely stagnant next year.

Single-family home affordability is at an all-time low, and many homeowners are reluctant to sell because it would mean giving up lower mortgage rates. With fewer new families moving into Georgia, economists say the housing industry is likely to remain in a recession through 2026.

Home prices, which rose 59% nationwide in the years after the pandemic, are considered overpriced. Forecasters expect 2026 to be the year prices begin to come down, though not sharply.

"We do not expect a repeat of the housing bust that accompanied the Great Recession," Chatterjee said, noting there are not enough distressed sales to trigger a major collapse. He added that housing markets could rebound more strongly once economic growth returns to normal levels.

long-term outlook 

Despite the slower growth ahead, UGA economists say Georgia remains well-positioned for a recovery once national conditions improve.

"Georgia's economy is resilient and well diversified," Chatterjee said. "This gives us much hope for the future."