KNOXVILLE — The Tennessee economy will continue its growth through 2006, according to a fall economic forecast released today by the Center for Business and Economic Research at the University of Tennessee.
Early each year, CBER projects economic trends for the state, then releases updates in the spring and the fall. The fall report shows Tennessee’s growth will keep pace with the nation.
“State and national economies certainly will confront some risks in the months ahead,” said Dr. Matt Murray, associate director of CBER, who coordinated the economic outlook. “But rising energy prices, higher interest rates and other factors certainly won’t derail the expansion.”
Tennessee’s job growth is expected to slow some in 2006, as compared to 2005. However, the state will make solid strides – along with the nation – in income growth, defined as wages, salaries, profits and dividends derived from personal earnings and investments.
The national and state economies have weathered a difficult year. Rising energy prices were pushed higher still by seasonal hurricanes, seven increases in interest rates by the Federal Reserve, and waning consumer confidence, according to the report.
At the same time, the nation’s pace of investment, particularly in computer technology, has been significant, said Murray. National export growth also has improved and job losses in manufacturing have slowed.
“It appears that the manufacturing sector has stabilized somewhat following several years of setbacks for both the state and the nation,” Murray says. “We expect to see a return to positive growth in state manufacturing jobs, reversing a trend that dates back to the 1990s.”
The report projects manufacturing job growth of 0.3 percent in 2006. Manufacturing jobs have not grown in Tennessee since 1998. Growing sectors like transportation and equipment (autos, trucks, aerospace) help account for the reverse in trend.
Overall Tennessee job growth for 2006 is projected at 1.4 percent, lower than the expected rate of 1.5 percent job growth for the nation. The state unemployment rate for 2006 is expected to average 5.6 percent, compared to a projected 4.9 percent for the nation.
Home heating costs are expected to rise through the winter, but gas prices at the pump are expected to drift downward, said Murray.
“While the nation may do a bit better than the state in 2006, Tennessee’s anticipated rate of expansion is still very respectable,” the economist noted.
The full report is available at http://cber.bus.utk.edu.
UT’s Center for Business and Economic Research provides economic forecasts to help state and local government and businesses plan for the future.
Contact: Matt Murray (865-974-5441)