2026 economic forecast comes with modest expectations, risk of recession

ALBANY – An annual economic prediction for the nation, state and region is not grim, but it’s not exactly rosy either, with the national economy limping along at low growth and roughly 50-50 odds of a state recession.

That is the prognosis put forward by economists at the University of Georgia’s Terry College of Business.

On Wednesday, Satanu Chatterjee, the interim dean at the business college, delivered the yearly outlook for the state and nation during a luncheon meeting on Albany State University’s West Campus.

At the moment, the U.S. economy is being buoyed by spending by the rich, the economist said.

“If you look under the hood … more than 50% of consumer spending has come from the top 10% of earners,” Chatterjee said. “That is where the resiliency is coming from. If you look at the bottom 90%, you see middle-class and lower-class earners are struggling.”

Those in the bottom 90% also are using borrowing to maintain spending and pay bills, he said.

“I do worry about that,” Chatterjee said. “We should keep a close eye on that.”

Although a national recession is not predicted, the college predicts overall growth at the national level for the year to be 1.3%, barely above stall level. The nation’s job growth is expected to flatline through 2026, with the unemployment rate predicted to hit 4.7% by the end of the year.

Georgia’s unemployment rate is also expected to rise during the year, from 3.6% in 2025 to 4.1% this year.

Weighing down the national economy are high tariffs, a shrinking labor force and the risk of a correction in the U.S. stock market, Chatterjee said.

“(This) will keep the risk of recession slightly elevated for a short time,” he said.

The slower growth and risk of a recession actually are expected to allow the U.S. Federal Reserve to relax interest rates, which will help prop up the economy.

At the state level, the outlook is for a 49% chance of a recession in Georgia in 2026 and for the economy to grow at a 2% rate. Unlike previous years, the state is not in a strong position to weather a downturn because there is less momentum in 2025 and people have less confidence in the economy.

There is not much to prevent the state from entering a recession, and in the event it is accompanied by a drop in stock prices or a financial crisis, the downturn could be lengthy and severe.

The prediction says there is upside potential in the event the nation’s protectionist trade and immigration policies are moderated.

For the Albany economy, 2026 is expected to be steady, barring a national downturn, said Sarah Brinson, dean of Albany State’s Darton College of Health Professionals.

“If the U.S. economy goes into recession in 2026, Albany’s economy will be in a recession,” she said.

Some of the employers driving the area’s economy are the Phoebe Putney Health System, Marine Corps Logistics Base-Albany, ASU, the Molson Coors Albany Brewery and Procter & Gamble, Brinson said.

“The Albany economy should hold up well despite low growth in the state and rest of the nation,” she said.

While tariff battles may impact other locations, Albany is shielded in that only 3.5% of its economy is dependent on exports, Brinson said. The low numbers of migrants in the community also will protect the community from disruptions caused by the displacement of labor through deportation actions.

Housing and the housing market are not expected to see any significant growth.

“The housing market is exected to (bring) economic stability rather than economic growth,” Brinson said. “It is true houses in Albany are more affordable than in other metro areas.”