Savannah Chamber

15 9 The Georgia Outlook for 2025 Jeffrey M. Humphreys Terry College of Business, University of Georgia The 2025 baseline forecast for Georgia's economy calls for a mild economic slowdown. Georgia is very well positioned to weather an economic slowdown. Georgia's inflation-adjusted GDP has fully recovered from the pandemic-recession. Georgia's total employment is well above its pre-pandemic peak level. In addition, there are many large projects in the state's economic development pipeline, including Hyundai's plan to begin operations of its massive electric vehicle manufacturing plant near Savannah – the largest economic development project in Georgia's history. In 2025, Georgia economy therefore is likely to outperform the US economy, especially with respect to job growth. The 2025 forecast calls for Georgia's inflation-adjusted GDP to increase by 2.4 percent, which is 0.8 percentage points above the 1.6 percent rate increase expected for US GDP. Similarly, Georgia's nonfarm employment will rise by 1.0 percent in 2025, which is better than the 0.6 percent increase estimated for the US. Georgia's unemployment rate for 2025 will average 4.0 percent, up only 0.3 percentage points from its 2023 unemployment rate of 3.7 percent, but up 0.8 percentage points from 2023. The increase in the labor force will be mainly due to labor force growth that exceeds job growth rather than mass layoffs. Georgia's unemployment rate will remain below the US unemployment rate. Georgia's nominal personal income will grow by 4.7 percent in 2025, which is 2.2 percentage points above our expectation of 2.5 percent inflation for 2024. The economic slowdown will be the main factor behind slower personal income growth, but we expect a smaller contribution to income from capital gains than in recent years. There are several developments that may cause Georgia's economy to perform better than our forecast predicts. For example, the Federal Reserve may cut policy interest rates faster than we expect. Tariffs may not increase as much as expected. Oil and natural gas prices could be lower than we expect. Net domestic migration and foreign immigration to Georgia might be stronger than we expect. Consumer spending out of savings accumulated during the pandemic or current income could be stronger than we expect. Finally, the economic push to Georgia's economy from several years – 2021 through 2024 – of elevated levels of economic development projects could prove stronger than we expect. In 2025, state-specific forces that will help Georgia's economy to outperform the nation's economy include: (1) the build out of many projects in Georgia's economic development pipeline; (2) competitive state-level economic development incentives that help refill Georgia's economic development pipeline; (3) more leverage than most states from new vehicle sales; (4) strong performance of the state's transportation and logistics industry, especially Georgia's deepwater ports; (5) solid prospects for Georgia's military bases; and (8) domestic migration trends that are very supportive of economic growth. For example, Georgia's population will grow more than twice as fast as the US population due primarily to the in-migration of workers and retirees from other states. Georgia's labor force therefore will grow faster than the US labor force. Most sectors of Georgia's economy will continue to expand – albeit more slowly. Health services, private education, and arts/entertainment/recreation will post the fastest job growth among Georgia's major industry sectors. Homebuilding, food and accommodations, transportation and logistics, manufacturing, mining, and finance will see moderate rates of job growth. Professional and business services, government, and other services will see slow, but positive job growth. Although retail sales will increase, small number of retail jobs will be lost due to the substitution of online shopping for in-store shopping, the realignment of consumer spending from goods to services, and other factors. We expect a substantial decline in the number of information jobs.

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