Business & Economy

State is in for a mild, short recession

Terry College of Business Dean Ben Ayers delivers the Georgia Economic Outlook at the Georgia Aquarium on Friday. (Photo by Brian Powers)

The report from Terry College says state should avoid the worst effects

While Georgia’s economy made a near-record recovery from the COVID-19 recession in 2022, tighter monetary policy and energy price shocks will likely trigger a mild and brief economic slowdown in 2023.

This will be a marked change from the 4% growth the state saw in 2022.

“A 2023 recession is not inevitable, but it would take near-perfect monetary policy plus a lucky break to avoid one,” said Ben Ayers, dean of the University of Georgia Terry College of Business.

Some industries — such as housing and real estate — will be affected more than others, but the overall risk of recession in 2023 is high — about 75%, Ayers told the crowd at the Georgia 2023 Economic Outlook at the Georgia Aquarium on Dec. 9 hosted by the Terry College of Business.

This year marked UGA’s 40th anniversary of the Georgia Economic Outlook, first prepared in 1983 to give Georgia’s leadership state-level insight into the economy. The forecast is based on the Georgia Economic Outlook report produced by UGA’s Selig Center for Economic Growth.

Despite the predicted recession, the decline in Georgia’s GDP is expected to be small relative to recent recessions and the decline predicted for the U.S. economy.

“Our forecast calls for Georgia’s inflation-adjusted GDP to decline, but only by .2%. So, it will be essentially flat,” Ayers said. “That is a small decline compared to prior recessions and to what we expect from the nation as a whole, which is a .7% decline.”


Despite the downturn, economists do not think Georgia will face substantial job losses in 2023. The number of jobs across the state will tick up by .1%, which is far better than the .5% loss across the United States.

Georgia’s unemployment rate will average 3.8% during 2023, compared to the 3.3% seen in 2022.

“One reason we do not expect many job losses is that employers will be slow to lay off workers,” Ayers said. “Employers went to great lengths to hire enough workers in the wake of the pandemic and know that workers will be in short supply on the other side of the recession.”

The interest-sensitive sectors of the economy — construction, financial activities, mining and logging — will likely face some job losses as jobs in manufacturing, hospitality, health care and logistics will continue to grow.

Overall, the new jobs added in these industries and the build-out of the economic development projects Georgia announced over from 2020 to 2022 will offset job losses in harder-hit industries.


A one-two punch of housing unaffordability and higher interest rates will result in lower home prices in 2023 and further slow the pace of new home construction.

Home prices increased 46% across Georgia since the beginning of the pandemic, and Moody’s Analytics estimates that most homes in the U.S. were overvalued by about 25% in 2022.

Housing prices are projected to fall by 12% during 2023. However, the real estate market is not in crisis, Ayers said.

“Despite substantial overvaluation, the fundamental supports for home prices are better now than during the Great Recession,” Ayers said. “We do not expect a repeat of the housing bust. One difference is that during the post-pandemic housing boom, people were buying homes to live in or as long-term investments.

“In addition, supplies of homes are constrained by years of underbuilding, which is the opposite of the situation during the Great Recession when most markets were overbuilt.”

At the end of 2023, as the economy recovers, it’s projected new home construction will rebound quickly to meet the demand for housing.

“In 2024, homes will be in short supply,” Ayers said. “The homebuilding industry may not lead the recovery of our economy, but it will support and contribute to it.”


Georgia’s economy should be on the road to recovery by the end of 2023 because the fundamentals are strong.

Despite depleted savings rates, household balance sheets remain strong. And the rate of people and companies moving into the state will continue to provide strong bedrock for economic growth.

Also, the Federal Reserve should moderate its approach to its monetary policy as the year wears on, Ayers said.

“We believe the Fed will not tolerate the degree of economic damage that would result from raising policy interest rates high enough to achieve its explicit inflation target of 2%,” he said. “We believe the Fed will settle for 3% inflation. If we are correct, the 2023 recession will only last two quarters.”

For more information about the 2023 Georgia Economic Outlook or detailed information about the economic forecast for specific Georgia MSAs, visit or attend an upcoming 2023 Georgia Economic Outlook luncheon.

UGA economists will deliver Georgia Economic Outlook programs in Athens, Albany, Augusta, Columbus, Jekyll Island, Macon and Savannah through January and February 2023.