The economy is improving quickly across Tennessee, according to the most recent survey conducted by the Boyd Center for Business and Economic Research at the University of Tennessee, Knoxville.
The Tennessee Business Leaders Survey shows that 39 percent of respondents listed adverse economic conditions as a top challenge for their businesses, down from 80 percent in August 2020. About half of respondents to the summer 2021 survey listed human resources and government regulation as more pressing issues, and about a fourth listed rising supplier costs as a problem.
Despite some challenges, about 75 percent of the business leaders surveyed expect the Tennessee economy to improve faster than the US economy over the next year, due primarily to good business investments. Almost 70 percent of respondents said Tennessee is doing a good or excellent job of creating a solid business environment.
“These results show us that businesses are bouncing back rapidly from the pandemic-induced recession in Tennessee,” said Bill Fox, director of the Boyd Center. “Business leaders believe not only that Tennessee’s economy is outpacing the nation’s, but the US economy is going full steam ahead as well.”
In the survey, 77 percent of business leaders said the best way to improve the state’s business climate is by enhancing workforce development; 67 percent said technology infrastructure would be beneficial as well. Other options with high responses were transportation infrastructure and economic development incentives.
Workforce development continues to be a top priority for Tennessee businesses, with 70 percent of respondents saying there is an insufficient supply of appropriately trained workers. Compared to past surveys, this finding has stayed roughly the same in East and West Tennessee but has increased in Middle Tennessee.
“We found that these business leaders from Middle Tennessee are saying that housing and childcare—both the availability and cost of these things—are hindering the workforce in their area,” Fox said. “These appear to be causing problems in the eastern and western parts of the state as well, but other problems such as substance abuse and quality of schools were often listed too.”
Almost half of business leaders surveyed believe inflation is here to stay, but the other half believe inflation is transitory or said it’s too early to tell.
About 46 percent said they plan to increase employee wages due to inflation, and almost 40 percent also said they plan to raise prices for consumers as a result. Other planned methods for counteracting rising costs include business reorganization (21 percent), increased use of artificial intelligence (16 percent), employee layoffs (5 percent) and closure of stores or offices (5 percent).
About two-thirds of business leaders don’t believe that reducing fiscal and monetary stimulus will lead to a recession. Roughly half of respondents believe that interest rates will begin to rise by the end of 2022, but a third said they don’t see that happening until sometime after 2023.
The Boyd Center, located in UT’s Haslam College of Business, conducted the survey between August 9 and August 23, gathering responses from business leaders across Tennessee. Respondents represent a broad sample of businesses across all industries, ranging in size from fewer than 50 employees to more than 5,000. The full results are available online.
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