Nearly half of U.S. states are considered to be in recession or at serious risk, but Alabama is bucking the national trend by staying firmly in growth territory. According to top economist Mark Zandi, the U.S. economy as a whole is teetering on the edge of recession—with more than a third of states accounting for nearly one-third of the country’s GDP confirmed as at high risk. Yet recent rankings and forecasts reveal Alabama as a bright spot in a gloomy national outlook.

Fresh projections from the University of Alabama’s Center for Business and Economic Research indicate Alabama’s economy is on track to grow 2.3% in real output in 2025. This expansion is being driven by robust consumer sectors—hospitality, retail, real estate, and health care—all expected to post solid gains. CNBC’s 2025 “Top States for Business” list moved Alabama up to 19th place, with the state’s workforce ranking and cost of living both improving considerably. Growing investments in career tech, job training, and energy infrastructure have strengthened the labor market and enticed businesses to establish or expand operations.

The Powering Growth Act and new Energy Infrastructure Bank seem set to revamp Alabama’s electric grid, channeling more energy projects toward rural and emerging industrial regions—a move predicted to anchor future industrial and employment growth.

Despite these achievements, Alabama faces lingering challenges. Infrastructure slipped in national rankings, health care access remains insufficient, and access to business capital is getting harder, all contributing to a middling overall quality-of-life score. The state is also undergoing demographic shifts—deaths now outpace births—but steady inbound migration is supporting ongoing population increase.

With a low and stable unemployment rate of 3.3% (as of May 2025) and competitive state tax rates, Alabama’s policy focus on workforce development, tax stability, and business-friendly infrastructure is paying off. Still, economists urge caution as global trade and investment trends introduce uncertainty. The state’s ongoing growth will hinge on continued investment in infrastructure, skills training, and attracting new industries.