KNOXVILLE — Pushed by personal income and job growth, Tennessee’s economy will outpace the nation’s over the next two years, a UT economic forecast says.
The spring 2004 Tennessee Business and Economic Outlook says manufacturing jobs in both the state and the U.S. remain in a slump, but Tennessee will see slight growth in this sector in 2006.
Most of Tennessee’s new jobs over the next two years will be in the service sector, health care and education, the UT Center for Business and Economic Research forecast says.
After averaging 5.8 percent in 2003, Tennessee’s unemployment rate is projected to fall to 4.4 percent in the third quarter of 2006, the report says. Wages, adjusted for inflation, should rise 2.7 percent this year and 3.8 percent in 2005.
“Following more than three years of stagnant economic growth, the Tennessee economy is poised for a rebound that will continue through 2006,” Dr. Matthew Murray, CBER associate director, said.
“Things haven-t looked so good since the end of the 1990s.”
Starting with the second quarter of 2004, overall job growth in Tennessee will approach 2 percent for each of the next two years, the forecast says.
“The rate of job loss in manufacturing will slow and positive year-over-year growth is expected beginning in (the third quarter of) 2005. While durable goods manufacturing will witness job expansion in most of the quarters ahead, fortunes are not so bright for non-durable goods manufacturing,” the report says.
Currently, there are approximately 251,000 Tennesseans in durable goods manufacturing jobs. By the second quarter of 2006 that number is forecast to grow to 257,300.
In non-durable manufacturing, which includes textiles, apparel and foods, the numbers will drop from 160,000 to 153,500.
Murray said the future of manufacturing jobs in Tennessee and the nation remains at risk.
“Job growth will be weak as producers replace workers with technology and as jobs continue to move offshore,” he said. “A new economic development strategy will be needed for the state in the years to come.”
Current Tennessee jobs in trade, transportation and utilities were put at nearly 580,000 and will grow to 600,000 by 2006.
The estimate of jobs in education and health services is 313,000 and will grow to 332,000 over the next two years.