Business leaders across the state are showing increased optimism for Tennessee’s economy while continuing to be pessimistic about the national economy, according to a recent survey by the Boyd Center for Business and Economic Research at the University of Tennessee, Knoxville.
More than 72% of those surveyed in January for the Tennessee Business Leaders Survey said they expect the state’s economic conditions to improve over the next year, and only 6% expect any kind of decline. As for the national economy, 26% of those surveyed expect conditions to improve and 49% think conditions will worsen.
“Our state has done a good job of weathering these past few years and keeping Tennessee open for business,” said Don Bruce, director of the Boyd Center. “People are moving to Tennessee and joining the labor force as well, which gives us a leg up and further instills confidence in Tennessee’s economy.”
Many survey respondents — including almost 60% in Middle Tennessee and 45% statewide – believe strong business investment is driving good economic conditions. Strong government leadership was the second most popular driver, cited among business leaders across the state at almost 27%.
The Boyd Center gathered about 50 survey respondents and government officials for a dinner in Nashville in February to discuss the state’s economy, and the sentiments shared in that room mirrored those of the survey. Despite the optimism about the general economy, many were still worried about a shortage of appropriately trained workers.
“When I asked these business leaders about Tennessee’s economy in relation to the U.S., nearly every hand in that room shot up. They all think our state is doing great,” Bruce said. “However, there are still countless employers out there looking for workers to fill positions. The demand is there, but the supply hasn’t kept up. How can we increase the supply of workers and get them ready to meet workforce needs in Tennessee?”
Almost 66% of survey respondents said they don’t have an adequate supply of workers trained to work in their industries. Roughly two-thirds said this is because applicants lack a work ethic, and almost half said that initiative was missing. Four in 10 business leaders added that potential employees lack technical skills or are unrealistic about compensation.
“There are still a lot of jobs that need to be filled, even though more Tennesseans are working now than before the pandemic,” Bruce said. “Employers are having trouble hiring from that dwindling pool of available and unemployed people.”
To improve Tennessee’s business climate, respondents said the state needs to focus on enhancing workforce development (60%), building better infrastructure (49%) and adding better technology infrastructure like high-speed internet (45%). Business leaders in Middle Tennessee were more likely to focus on physical and technological infrastructure, while East Tennessee respondents were more interested in workforce development.
Inflation still plays a big role in business decisions as well, with almost half of respondents saying their companies are facing adverse economic conditions. To combat inflation and the worker shortage, 78% of respondents offered employees higher wages, 74% increased prices for customers and 65% looked at new supply chain options to lower costs.
- 47% of business leaders said they struggle to attract or retain workers. Business leaders in East Tennessee tend to feel the shortage more (55%), while those in middle Tennessee see it as less of an issue (38%).
- Housing was the top issue related to retaining or attracting workers—both the cost (cited by 35%) and the availability (cited by 29%). East Tennessee respondents were more likely to focus on availability of housing, and those in middle Tennessee were worried more about the cost of housing.
- Four in five respondents expect a recession to hit the U.S. economy this year.
- About 86% of business leaders want the Federal Reserve to stop raising interest rates this year.
The full set of survey responses is available on the Boyd Center website.
Cindi King (865-974-0937, email@example.com)
Erin Hatfield (865-974-6086, firstname.lastname@example.org)