Views on inflation are beginning to soften as many state business leaders believe Tennessee’s economy is on a much better trajectory than the nation’s, according to the most recent survey by the University of Tennessee, Knoxville’s Boyd Center for Business and Economic Research.
Conducted in August, the Tennessee Business Leaders Survey shows respondents easing out of a pessimistic view on inflation. Only a third (32.7 percent) said that high inflation is here to stay—down considerably from about half (53.1 percent) in the previous survey, conducted in January.
“People are seeing some prices start to fall, and that’s good news,” said Don Bruce, director of the Boyd Center. “As gas prices continue to fall and supply chain issues clear up, inflation is still high on peoples’ minds, but it’s not as dire as it was in January. They’re starting to see the light at the end of the tunnel.”
While 54.4 percent of business leaders surveyed said they expect the US economy over the next year will be either considerably worse or a little worse, 67.5 percent believe the Tennessee economy will be a little better or considerably better during that time frame.
Elaborating on why their expectations for the state were better, one respondent wrote, “Tennessee’s economy is being driven by growth in population, which is driven by favorable business environment, cost of living, and low taxes.”
About two-thirds of survey participants (69.7 percent) believe Tennessee is headed in the right direction, with 72.5 percent saying the state is doing a good or excellent job of creating a favorable business environment. About 60.6 percent expect their revenue to grow moderately or substantially, and 48.5 percent said their profits will grow moderately or substantially as well. Business leaders strongly believe market demand and growth will propel their business profits forward, with 67 percent listing it as a factor—up from 53.9 percent in January. Respondents believe new technologies and cost reductions will help drive profits as well.
Despite the optimism about the state’s economy, business leaders say there is plenty of room for improvement. When respondents were asked to identify three areas in which the state could invest more resources, enhanced workforce development (65.7 percent) strongly led the responses. Technology infrastructure (48.6 percent) and infrastructure development (46.7 percent) rounded out the top three.
Nearly seven out of 10 business leaders said there is an insufficient supply of appropriately trained workers in Tennessee, with additional training and educational opportunities viewed as key to improving the shortfall. Over half of respondents (56.4 percent) said that retaining workers is still an issue, attributing it primarily to the cost and availability of housing and child care.
Fears of a recession were significant, with more than half of business leaders surveyed saying there’s a greater than 50 percent chance of it happening this year and just 15.8 percent putting the chance below 25 percent. Nearly three-quarters (71.3 percent) said the Federal Reserve should stop raising interest rates either this year or in the first half of 2023.
The full set of survey responses is available on the Boyd Center website.
The Boyd Center, located in UT’s Haslam College of Business, conducted the survey between August 2 and 21, gathering responses from business leaders across Tennessee. Respondents represented a broad sample of businesses across all industries ranging in size from fewer than 50 employees to more than 5,000.
Lindsey Owen (865-974-6375, firstname.lastname@example.org)
Erin Hatfield (865-974-6086, email@example.com)