The 18th annual Economic Forecast Breakfast, hosted by Simon Medcalfe, PhD, an economist and professor at Augusta University’s James M. Hull College of Business, took place on December 2. The event, supported by a Wells Fargo endowment, attracted campus leadership, faculty, staff, students, and members of the Augusta community.
Medcalfe began the session by explaining economic growth concepts and highlighting that real gross domestic product (GDP), which accounts for inflation, provides a clearer picture of economic performance. He noted that Augusta’s nominal GDP is about $37 billion but much of its recent rise is due to inflation. “That’s actually probably due to inflation that we’ve experienced over the last five-or-so years. If we subtract inflation out, we get real GDP, which is a better measure of economic growth because now we’re thinking about producing more goods and services, not just because those goods and services have gotten more expensive the last quarter of a century or so,” Medcalfe said.
Since 2001, Augusta’s real GDP has grown at approximately 1.5% per year—below the national average of 2.2%. Richmond County produces about 44% of regional output while Columbia and Burke counties have doubled their real GDP in the past 25 years.
This year’s event included research contributions from two undergraduate students: Kacey Axon and Brandon Day. Axon analyzed factors behind uneven economic growth across Georgia using county-level data on per-capita income and GDP. Her findings showed that higher income inequality in counties leads to slower growth due to limited opportunities suppressing overall progress.
Axon further examined what drives income inequality nationally by looking at tax policy, minimum wage levels, education access and labor-market characteristics. She found education access and industry diversity are most effective in reducing inequality: “A lot of times when we’re thinking about income inequality, we think about things like tax policy and minimum wage being effective, but my results showed the opposite. It was education access and industry diversity that mattered for inequality,” Axon said. “So, what can Georgia do now? How can Georgia fix this?”
She pointed out Georgia’s strong ranking in preschool access but emphasized expanding educational opportunities in rural areas as well as diversifying industries—citing the state’s film sector as an example: “When we think about the industries in Georgia, we sometimes think about agriculture, but Georgia has actually done a really great job developing a film industry since the early 2000s. This has created thousands of jobs and strengthened the labor market immensely,” she said. “If we can continue to diversify our industries, we’ll see more growth in Georgia. Overall, education access and industry diversity is what matters the most for Georgia’s growth. Reducing inequality will help Georgia grow.”
Day focused his research on how tariffs affect employment across sectors within Georgia from 2009 to 2023—a period when U.S tariff rates remained mostly around 2%, with a spike during steel and aluminum tariff increases in 2018. He found higher tariffs were linked with slight increases in manufacturing and agriculture jobs but declines in service-sector employment offset these gains.
He explained that changes take time to impact employment: “It takes time before a lot of the changes are really realized. So there is an average of a three-year lag before any changes to the rates are really seen affecting the economy overall,” Day said.”What I found with my research is the tariffs are not a primary driver for your employment trends… If economic conditions are good… changing tariff rate can really help you… but simply changing tariff rates are just not going to help you save the manufacturing sector.”
Medcalfe also discussed experimental data from the Bureau of Economic Analysis regarding research & development (R&D) spending’s role in GDP growth; R&D activity remains concentrated among several states—with Georgia ranked sixteenth nationally—and private organizations account for most R&D spending (78% business; 18% higher education). University-based research plays an important part: A one percent increase correlates with a 1.6 percent increase in GDP compared to roughly one-to-one for business R&D.
He concluded by outlining challenges facing next year’s economy—including inflation fluctuations following its peak in 2022; uncertainty over trade policies; unresolved budget issues; Federal Reserve divisions; as well as artificial intelligence impacts on entry-level jobs leading to above-average unemployment among recent graduates since 2022.
“Overall, Augusta and Georgia are positioned well for economic growth in 2026 with a strong commitment to early childhood education, a diversified labor market and strong research and development,” Medcalfe said.”However uncertainty abounds in national macroeconomic policy that could negatively impact growth next year.”
