Tennessee’s economy performed well in the first half of 2015 and largely followed a similar pattern of growth as the US economy, but the state’s unemployment rate is still higher than the national average, according to a study released today by UT’s Center for Business and Economic Research.
“Tennessee continues to perform well compared to the nation, but the state’s unemployment rate remains stubbornly higher than the nation’s,” said Matt Murray, assistant director of CBER, who directed the study.
The study, “Tennessee Business and Economic Outlook Fall 2015,” predicts the direction of the state and national economies by examining economic factors and trends.
Between the first and second quarter, Tennessee’s unemployment rate fell 0.7 percentage points to 5.8 percent. This was the first time since 2008 that the state unemployment rate has dropped below 6 percent. This rate will continue to trend downward in 2016 to 5.6 percent but will remain above the national rate.
Taxable sales will continue to expand, growing by a projected 5.1 percent this year and 4.2 percent in 2016. In 2015, sales growth was especially strong for hotels and motels, which registered sales tax growth of 10.6 percent, as well as auto dealers, with sales tax growth of 10.2 percent. Strong auto and hotel/motel sales are expected to continue into 2016, but at a slightly slower pace.
Tennessee highlights from the report include:
- Tennessee’s nominal personal income grew at a slightly faster pace than the nation’s during the first half of the year and will advance 4 percent this year and 4.3 percent in 2016.
- Leisure and hospitality will enjoy a robust employment growth of 2.8 percent.
- Professional and business services, as well as education and health services, will enjoy stronger employment growth in 2016 than in 2015.
- Nonfarm employment is projected to increase by 1.8 percent this year and 1.7 percent in 2016.
- The natural resources, mining, and construction sector will see the strongest gains in 2015 at 3.7 percent, thanks to the continued housing market recovery.
- Tennessee’s manufacturing sector outgained the nation’s manufacturing sector in the first quarter of 2015 but saw a slight contraction of jobs in the second quarter. Manufacturing employment should see strong employment gains of 1.9 percent in 2015 and 1.0 percent in 2016.
Nationally, real consumer spending advanced 3.1 percent in the first quarter and is expected to grow by 3.1 percent for the year as a whole. Consumer spending has been bolstered by solid employment gains and low gas prices. As a result, automobile sales have picked up.
America’s housing market recovery continues to move forward, as residential fixed investment grew by 10.1 percent in the first quarter of 2015, and an additional 7.8 percent in the second quarter.
“It is encouraging that the national economy continues to expand despite global weakness and financial market instability,” said Murray.
Other U.S. highlights include:
- Inflation-adjusted GDP should increase by 2.5 percent in 2015 and 2.8 percent in 2016.
- Nonfarm employment is projected to advance 2.1 percent in 2015 and 1.7 percent in 2016.
- The unemployment rate will continue to trend downward, falling to 5.4 percent in 2015 and 5.2 percent in 2016.
- Inflation will remain subdued and below the Federal Reserve’s target range through the short-term outlook horizon.
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CONTACT:
Matt Murray (865-974-6084, mmurray1@utk.edu)
Tyra Haag (865-974-5460, tyra.haag@tennessee.edu)