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KNOXVILLE — The number of jobs in Tennessee will grow, personal income will increase and the state’s unemployment rate will edge down in the next few years.

Those projections spell good news for Tennessee’s economy, according to a report by the University of Tennessee’s Center for Business and Economic Research (CBER).

Even so, Tennessee’s economic growth will lag slightly behind the nation’s in the next two years.

Prepared for Tennessee Gov. Phil Bredesen, the state and national forecast, which analyzes recent trends and projects the future, helps guide policymakers and business leaders.

For the first time since 1998, Tennessee should see growth in its manufacturing jobs in 2006.

-While jobs in manufacturing are becoming an ever-smaller slice of the economic pie, many areas of the state still rely heavily on manufacturing jobs,” said Matthew Murray, CBER associate director and project director.

-Statewide manufacturing accounts for just over 15 percent of all jobs in the state, but 23 counties depend on manufacturing for more than 40 percent of their jobs.- The report shows that rural counties tend to rely most heavily on manufacturing while urban counties rely more on service jobs.

Transportation equipment production has helped boost durable goods manufacturing in the state. Tennessee now ranks seventh in the nation in the number of jobs in the transportation equipment sector. The high ranking is due in large part to the location of Nissan and Saturn in the state in the 1980s.

-Those location decisions continue to pay dividends today,- Murray said.

In mid-November, Nissan North America announced it would move its corporate headquarters, along with about 1,300 jobs, from the Los Angeles metro area to Franklin. In December, DENSO Manufacturing Tennessee announced a $185 million expansion in Maryville with the potential for 500 new jobs by late 2007.

While transportation equipment production has gained in importance in Tennessee, the same sector is subject to intense competitive pressures as evidenced by the recent struggles of Ford and GM, both of which recently announced major job cuts. The state will have to work hard to keep transportation related jobs in this increasingly competitive environment according to the report.

-One of the important factors that can improve Tennessee-s competitiveness is education and workforce development,” Murray said.

In addition to manufacturing, most other sectors of the economy also will see job growth. Construction will see the strongest growth, followed by financial activities. Increases are also expected in professional and business jobs, education and health jobs and leisure and hospitality services jobs.

Personal income — the sum of wage, profit and other income earned by Tennesseans — will grow by 5.5 percent in both 2006 and 2007. The state-s unemployment rate, 5.6 percent in 2005, is projected to edge down to 5.3 percent in 2006.

Nationwide, the news is even better.

-The nation saw a 1.6 percent rate of job growth last year compared to Tennessee-s 1.0 percent growth rate. The nation will continue to build on this momentum over the course of the next two years,- Murray said.

-The economic outlook remains strong despite rising interest rates, a series of natural disasters, and high energy prices. This is testimony to the resilience of the economic expansion that dates back to the end of the recession in 2001,- Murray said.

For the report, visit


Amy Blakely, (865) 974-5034,
Matthew Murray, (865) 974-6084,