Alfie Meek, Ph.D., director of the Georgia Tech Enterprise Innovation Institute’s Center for Economic Development Research, told the Greater Perimeter Chamber that 2026 will look a lot like 2025.
City officials and business leaders from Sandy Springs and Dunwoody listened to Meek’s 2026 economic outlook the morning of Jan. 21 at the GPC’s Signature Breakfast within the Sandy Springs Performing Arts Center.
The economic forecast is nationwide, delving into inflation, interest rates, the labor market, consumer spending, domestic manufacturing, and housing construction.
Meek said his views reflect his opinions and do not reflect the views of his employer or the state.
Opportunities and obstacles
Economic opportunities revolve around the artificial intelligence boom, onshore manufacturing, and fiscal stimulus. Obstacles to growth include inflation, supply chain and geopolitical disruptions, a weak labor market, and housing costs.
After a strong first quarter, Meek said he thinks gross domestic product will average around 2.25 percent this year.
“We’ve got these opportunities that are trying to push [the economy] up, and then we have these obstacles that are trying to push it down,” Meek said. “I think there’s going to be a strong first quarter in GDP, but then I think it’s going to taper a little bit … which is exactly almost what I forecast for 2025.”
Meek said Americans can expect inflation to be higher at the end of 2026, driven by higher out-of-pocket healthcare costs, fiscal stimuli like tax cuts and spending, and the easing of monetary policy.
Americans should not expect rate cuts until Federal Reserve Chair Jerome Powell’s term ends in May, Meek said. He projects the Fed to cut its benchmark rate by 100 basis points in the second half of the year, creating an elevated, inflationary balance sheet and slightly higher inflation by December.
Domestic manufacturing is poised for a recovery this year, Meek said, assuming lower energy prices, higher tariff revenue, and onshoring. He said he’s skeptical U.S. manufacturing will break out of its three-year recession.
By the end of the year, Meek said he projects 325,000 new jobs nationwide, an average federal fund rate of 3.125 percent, the 10-year Treasury yield around 4.2 percent, mortgage rates around six percent, and a roughly 4.8 percent unemployment rate.
American debt concerns
The federal debt is expected to reach $39 trillion this March. Meek argues that spending and fiscal stimulus are keeping the United States out of a recession.
“Yeah, if you’re going to pump $2 trillion extra dollars into the economy every year, you will not go into recession,” he said. “We’re going to continue to do that … there’s going to be some other repercussions for that.”
Meek said he thinks the American economy will start the year strong, with short-term stimuli like the “One Big Beautiful Bill Act” and the federal government’s nearly $2 trillion spending deficit supporting growth.
“The budget deficit is going to continue to be pretty large … we spend $7 billion per day more than we take in, now that’s a problem,” Meek said. “If you spent $1 million a day since the day Jesus Christ was born, you would not have come close to spending $1 trillion. You’d be only about three-quarters of the way there.”
Meek said inflation is created when the government prints more money. He said he thinks rate cuts in the past 12 months were a mistake, as are future cuts.
“When you print money, which is really what cutting the rate is doing, you create inflation,” Meek said. “And if you take a look at the money supply and how it’s growing, you see it exploded during COVID. Why? Because we sent everybody a bunch of checks. We grew the money supply of the United States by 40 percent in 2020. Understand what that means. Two out of every five dollars ever created in the history of the United States were created in 2020. That was inflationary.”
Two different economies
While recent consumer spending headlines look strong, Meek said the economy is bifurcated, or divided into two. There are the top 10 percent of income earners making more than $190,000 a year, and everyone else.
“The wealth effect is driving consumption,”he said. “The bottom 90 percent … are spending exactly what they spent in 2020, once you adjust for inflation. They’ve not gotten ahead at all. All of the spending is in the top 10 percent, and they’ve adjusted as a share of total spending from about 43 percent pre-COVID to about 50 percent now.”
Meek said the seven percent jump is “huge” and the top 10 percent are making consumer spending totals look good.
Economic red flags, like credit card and auto loan delinquencies, are at an all-time high. Meek said he expects consumer spending to decline after the first quarter.
After his address, Meek said that despite recent improvements, the incomes of the bottom 90 percent are not keeping up with long-term inflation.
“They’re struggling,” he said. “They tried to keep up by putting it on credit cards, going into debt, thinking it was a short-term thing, and it’s not a short-term thing.”
