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KNOXVILLE, Tenn. — Tennessee’s above average personal income growth has come to a sudden and unexpected halt after outpacing regional and national averages the past five years, a University of Tennessee economist said Tuesday.

 Dr. Matt Murray said state personal income growth averaged 5.5 percent during the first half of the decade, compared with 4.8 percent growth for the Southeast and 4.3 percent for the nation.

 The U.S. Commerce Department reported this week that Tennessee had the nation’s fourth slowest growth rate in 1996 with 3.3 percent, compared to the Southeast’s 4.3 percent and the nation’s 4.5 percent.

 “The slowdown is a sharp contrast to the way Tennessee has shown income growth in the last ten years or so,” Murray said. “Looking back to the mid-1980s to 1995, Tennessee was well above the national average in terms of per capita income growth and income growth generally, and at or near the top of the southeastern states.

 “This is really a bit of a surprise and a very discouraging recent trend for the state economy.”

 The Commerce Department cited cutbacks in the automobile industry as a reason for Tennessee’s personal income dip.

 Murray said a strike among General Motors automobile workers had a negative effect on many Tennessee suppliers. The problems, however, also relate to weakness in the state’s manufacturing sector as a whole, he said.

 “The state’s manufacturing sector, in particular non-durable goods, has had a very difficult time in the last couple of years,” Murray said. “That weak growth probably contributed significantly to slowing Tennessee’s personal income growth.”

 The average per capita income of Tennesseans was $21,764, compared to $24,231 for the nation. The state had made up much of the gap in recent years, but that progress may be slowing down, Murray said.

 “We have pushed Tennesseans’ personal incomes to about 90 percent of the national average in recent years,” Murray said. “This abrupt turnaround is not going to bode well for Tennessee’s future ability to converge closer to national measures for economic well-being.”


 Contact: Dr. Matt Murray (423-974-5441)