Georgia economy expected to grow next year, but at a slower rate

ATHENS – A burgeoning population and sustained job growth will keep Georgia's economy growing in 2025 — just a bit more slowly than in 2024, according to economic forecasters at the University of Georgia Selig Center for Economic Growth.

Georgia's economy is projected to grow by 2.4% in 2025, a slowdown from the 3.1% the state saw in 2024. However, the state's GDP is projected to grow faster than the nation's, which forecasters project to grow by 1.6% in 2025.

"Because the 2025 economic slowdown is due to a deliberate policy shift and not economic shock or a factor outside our control, we think the slowdown will be gradual and not last long," Terry College of Business Dean Ben Ayers told the crowd gathered at Atlanta's Georgia Aquarium for the kickoff of the 2025 Georgia Economic Outlook series.

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 42 years, Selig forecasters have produced an economic forecast report for the state and its metropolitan statistical areas.

The major driver of Georgia's slowdown is the Federal Reserve's 2022 move to constrain lending to control inflation. That successfully shrunk inflation from 8% in 2022 to 3% in 2024 and a projected 3% again in 2025.

As the Federal Reserve eases these constraints, Georgia's economy — and the nation as a whole — will continue to expand but will grow more slowly in 2025 than in 2024.

"In September, the Federal Reserve began to reduce monetary policy restraint by cutting policy interest rates," Ayers said. "We expect additional rate cuts in 2025, and quantitative tightening will end. Credit and money supply will expand moderately. These policy moves, the resilient labor market and recent economic development success will ensure that Georgia's economy grows throughout 2025 and accelerates in 2026."

The probability Georgia will slip into recession is 25%. The number of jobs will rise by 1% in 2025, slower than the 1.5% gain estimated for Georgia in 2024 but higher than the national job growth rate of 0.6%.

Georgia's unemployment rate is poised to increase from 3.7% to 4%, lower than the 4.3% expected at the U.S. level. This increase in unemployment will be due to slowed hiring rather than layoffs. This slight loosening of the labor market will help hold inflation steady at 3% in 2025.

"Small increases in the unemployment rate will be enough to keep inflation low — that's good news," Ayers said. "But it won't be enough to scare consumers — that's also good news."

Health care and housing will lead Georgia's economic growth in 2025. A growing population and number of senior residents will continue to boost health care hiring across the state.

Homebuilders will ramp up construction of single-family homes in the coming year because of slightly lower mortgage rates, favorable demographic trends, and a housing shortage that has been apparent since the pandemic. Georgia's homebuilders will increase the number of single-family homes built in 2025 by 9%. Home prices — which have increased 65% since before the COVID-19 pandemic — are expected to hold steady.

Georgia is likely to see job losses in retail and information jobs due to advances in technology and competition from online retailers.

Georgia has broken records in the number of new jobs and industries attracted to the state, and that will slow this year due to the slowdown of the national and global economy. Still, with the build-out of existing projects, Georgia is poised to see thousands of new jobs created over the next few years.

"We expect Georgia's economy to grow faster than the U.S. economy in 2025 and beyond," Ayers said. "One advantage is economic development prowess. Other advantages include a favorable mix of industries, supportive demographics, excellent transportation, logistics infrastructure, a competitive tax climate, and low costs of living and doing business."

UGA economists will deliver Georgia Economic Outlook programs in Athens, Albany, Augusta, Columbus, Jekyll Island, Macon and Savannah throughout January.