ATLANTA , March 04, 2026 (GLOBE NEWSWIRE) -- The nation’s K-shaped economic recovery, in which higher-income Americans are seeing their income and wealth rise while lower-income Americans are struggling with weaker income gains and steep prices, will continue in 2026, according to Rajeev Dhawan of the Economic Forecasting Center at Georgia State University’s J. Mack Robinson College of Business.

“The bifurcated economic recovery that began in early 2024 will continue for some time this year before another round of help later this year from the Federal Reserve (rate cuts and balance sheet maneuvers) will aid small business growth. The economy also will adjust to artificial intelligence developments and trade or tariff adjustments to grow balanced (both income and well-paying job growth) by early 2027,” Dhawan said today (March 4) at his first Economic Forecasting Webinar of 2026.

The most recent geopolitical development regarding Iran is expected to produce only short-term friction in the U.S. via the second-round effect of slowing growth of major Asian economies (China, South Korea, Japan, and India) as they depend on oil and liquified natural gas flowing through the Strait of Hormuz. One potential wild card to the future economic outlook: a prolonged closure of this shipping lane, lasting more than a few weeks, would affect not only Asia but also Europe’s economic growth, which would spill over to the U.S. via trade relationships.

“On the upward slope of the ‘K,’ gross domestic product and income metrics have been superb over the last three quarters,” Dhawan said. “Contrasted with job growth, especially after the benchmark revisions released in February, and you’ll see on the downward slope of the ‘K’ that instead of adding 2.5 million jobs over the past two years, we added only 1.5 million. The revisions cut our estimated job additions by almost one million.”

“It also has become clear that there has been a sizable compression of entry-level to middle-management white-collar corporate jobs, with the entire sector shedding more than a quarter-million jobs over the last two years,” Dhawan said. “Although we have not heard much about mass firings, there have been reports of Atlanta-area Fortune 500 companies, such as Coca-Cola, UPS, and Home Depot, as well as smaller firms, announcing strategic corporate layoffs.”

Dhawan noted that the wholesale trade and information technology sectors, which include higher-level film industry technicians, have lost more than 200,000 jobs. “Combine those reductions with corporate job losses and that’s more than 462,000 jobs in the last two years, which is a lot of well-paying jobs, which have disappeared. And some of these are entry-level positions that are the lifeblood for fresh college and university graduates, leading to a sharp jump in student loan defaults.”

“Older workers with nest eggs who are in the stock market and sitting on 401(k)s and other funds, are doing well and continuing to buy in this K-shaped economy. It’s the younger ones who are having issues,” Dhawan said. “Look at Chipotle, which is having trouble with sales, whereas higher-end restaurants are faring better. Young people who are having trouble finding work are not going out to eat that much, whereas people 55 and above have the most assets and financial firepower to spend on services, such as eating out, traveling, and medical services.”

In response to stuttering job gains, the forecaster expects the Federal Reserve to cut rates aggressively in the second half of 2026. This third-round of cuts since 2024 finally will bring the cost of financing for bank-dependent firms (small and medium enterprises) to a level where they can exploit growth opportunities. This round of cuts will also benefit the housing construction industry, and a drop in mortgage rates close to 5 percent will help with home sales and refinancing.

Specifically, U.S. real GDP growth will rise from 1.3 percent in the first half of 2026 to a trend-like 1.9 percent in the second half of 2026, and an above-trend 2.4 percent in the first half of 2027. On an annual average basis, growth will be 1.9 percent in 2026, 2.1 percent in 2027, and 1.9 percent in 2028.

National job growth will be anemic in the coming quarters but will pick up in late 2026. From only 18,000 monthly gains in 2026, job gains will number a respectable 89,000 monthly in 2027.

Although manufacturing, another well-paying job sector, has shed close to 300,000 jobs nationwide over the last two years, the sector is a bright spot in Georgia’s economic outlook, Dhawan said. “Georgia has held its own, with year-over-year job growth of 2 percent in this sector, and 2,600 jobs added. That may not sound like much, but it has helped offset 1,300 state job losses in corporate, wholesale, and information technology.

As is true in the national economy, most jobs gains in 2025 were in the healthcare and hospitality sector in the state.”

“Looking ahead,” Dhawan said, “the news is bright for manufacturing in Georgia, with numerous announcements about companies building plants or expanding existing facilities, mostly outside the Atlanta metro area. It helps that the state is now a major player in aerospace with Lockheed, Gulfstream, and suppliers — which will be a boon with the push for increased defense spending by the U.S. and our NATO allies, particularly Germany which will increase its defense budget by a trillion dollars over the next 10 years.”

Another area of economic growth for Georgia will continue to be data centers being built by technology companies, who are expected to shell out more than $100 billion dollars on capital expenditures. This will contribute to economic growth through the construction multiplier by engaging building suppliers ranging from concrete suppliers to HVAC contractors. But unlike new office buildings, which are subsequently stocked with employees, the multiplier effect with data centers ends when construction is complete. “Electricity demand will rise, but it will not lead to hiring many corporate long-term workers,” Dhawan said.

As for tariffs, Dhawan said where last year’s tariffs were absorbed across the supply chain based on the assumption they were temporary, expectations have shifted after the White House’s reaction to the U.S. Supreme Court’s Feb. 20 ruling.

“The impact of tariffs seems to be settling, which is potentially good news for the Port of Savannah,” Dhawan said.

Highlights from Rajeev Dhawan’s Economic Forecast for Atlanta and Georgia

• Georgia jobs: The state added 41,900 jobs in calendar year 2024. That pace moderated sharply to 15,400 jobs in 2025. Job additions will pick up to 42,900 jobs in 2026 (6,800 premium). In 2027, the state will add a better number of 74,800 jobs (17,100 premium) and then 83,600 jobs in 2028 (19,800 premium).
• Georgia’s nominal personal income will grow 4.8 percent in 2026, a better rate of 5.8 percent in 2027, and 5.5 percent in 2028.
• Atlanta jobs: The metro area will add 28,600 jobs in 2026 (3,900 premium). As recovery takes hold in 2027, the metro area will add a respectable 56,800 jobs (12,900 premium), and 62,500 jobs (13,900 premium) in 2028.
• Atlanta housing permitting activity dropped by 18.9 percent in 2025; single-family permits decreased by 15.5 percent, and multifamily permits decreased by 24.3 percent. Total permit numbers will fall by 6.0 percent in 2026 as multifamily permits experience a sharp drop again of 16.5 percent, and single-family permits decrease by only 0.2 percent. In 2027, total permit numbers will grow by 6.6 percent as single-family permits increase 6.5 percent. Normalcy will return in 2028 when permit activity grows by 12.1 percent.