Alabama Business™
Established in 1930, each issue contains a free quarterly Alabama economic forecast update.
Economic Outlook Update:
Alabama Business | January 2026
- Alabama’s economy, as measured by inflation adjusted Gross Domestic Product (GDP) grew by 4.7 percent during third quarter 2025 totaling over $262 billion, following a 0.7 percent decline and a 1.2 percent increase seen in the first two quarters of the year respectively. Fourth quarter rate of growth is expected to be 1.4 percent, the annualized economic growth is estimated to be around 1.7 percent for 2025. For 2026, the state’s economy is expected to grow by about 1.5 percent.
- The State lost 700 jobs in December from the previous month, bringing the total net gain in jobs to 9,100 from December 2024 to December 2025, while the seasonally adjusted unemployment rate dropped from 3.3 percent to 2.7 percent, employment is expected to grow by about 0.6 percent in 2026, following a 0.8 percent increase seen in 2025.
- During the twelve-month period ending in December 2025, seasonally adjusted number of unemployed workers dropped from 78,478 to 64,150 while the labor force participation rate went up just slightly from 57.6 percent in December 2024 to 57.7 percent in December 2025.
- For the first three months of the fiscal year, State’s total tax revenues increased by 2.9 percent to approximately $4.3 billion. For the same period sales tax receipts declined by 1.8 percent to about $772 million while individual income tax revenues went up 11.3 percent, totaling approximately $1.8 billion. Total tax revenues are forecasted to increase by about 1.9 percent for the FY2025-2026.
- For the first eleven months of 2025, Alabama exports totaled $22.4 billion, down from approximately $25 billion for the same period during previous year. Transportation equipment remained state’s largest export, declining from approximately $13.1 billion during first eleven months in 2024 to $11.1 billion for the same period in 2025. Canada remained the largest destination for Alabama exports, totaling $4 billion for the first eleven months of 2025, compared to $4.2 billion for the same period in 2024, followed by Mexico ($3.7 billion), Germany ($3.3 billion), China (almost $2.0 billion), and India ($814 million).
- For the first eleven months of 2025, Alabama imports totaled approximately $32.3 billion, down from $36.0 billion for the same period during previous year. Imports from Mexico totaled $6.1 billion for the first eleven months of 2025, compared to $6.5 billion for the same period in 2024, followed by South Korea ($5.2 billion), Germany ($3.3 billion), Canada ($3.0 billion), and China ($2.7 billion). Transportation equipment was the largest import ($11.7 billion), followed by nonelectrical machinery ($2.8 billion), followed by electrical equipment and appliances and oil and gas ($2.5 billion each).
- The US economy grew by 4.4 percent in the third quarter 20254, following a 3.8 percent increase seen in the second quarter, and a decline of 0.6 percent in the first, growth in the fourth quarter is expected to be around 1.5 percent. Increase in GDP in the third quarter was primarily due to increases in consumer and government spending, and investments. Consumer spending increased by 3.5 percent with spending on nondurable goods rising 3.9 percent. Nonresidential investment spending rose by 3.2 percent while residential investments dropped by 7.1 percent. U.S. economy is expected to grow by 2.2 percent in both 2025 and 2026.
- U.S. inflation rate, as measured by consumer price index (CPI) rose by an annualized rate of 2.7 percent in 2025, forecast for inflation rate calls for a 2.5 percent increase in 2026.
- The US economy added 50,000 jobs in December while the unemployment rate was 4.4 percent. Most of the job gains were seen in food services (27,000) and healthcare (21,000). Retailing lost 25,000 jobs while payrolls in other sectors of the economy remained essentially flat. Overall employment gains are expected to just slightly better in 2026 compared to 2025.
