Although Tennessee business leaders said they are feeling the effects of tariffs, according to a new survey by the Boyd Center for Business and Economic Research at the University of Tennessee, Knoxville, most still believed the chance of a U.S. recession is low and thought Tennessee’s economy had a better outlook than the national economy over the next year.
About a quarter of employers who responded to the summer 2025 Tennessee Business Leaders Survey, administered in August, said tariffs had affected their business a lot, while 49% said they had felt a little effect from tariffs. Forty-four percent said they were passing on some or all of the tariff costs to customers.
In the most recent previous survey, conducted in January, only 5% of respondents thought the chance of recession was over 50%. In the August survey, that figure rose to 19%. However, over half of business leaders remained optimistic that the chance of recession this year was less than 25%.
This optimistic outlook extended to the Tennessee economy but not the nation’s. A total of 44% of respondents said the national economy was worse than it was last year, and 43% of business leaders expected the U.S. economy to decline over the next year. However, nearly two-thirds of employers believed Tennessee’s economy will outperform the U.S. economy over the next year, attributing the difference to business investments and government leadership in the state.
“Despite talk of tariffs and recession, it’s good to see that these industry leaders have a sunnier outlook for Tennessee,” said Don Bruce, director of the Boyd Center. “The state’s efforts to create a robust arena for conducting business seem to be paying off.”
Nearly 70% of business leaders said Tennessee was headed in the right direction, and over 60% said the state could improve its business climate even more through infrastructure development. Other areas for improvement included enhanced workforce development (53%) and energy infrastructure (46%).
Adverse economic conditions continued to be the top challenge faced by Tennessee businesses, with 45% of survey respondents listing it among their top three concerns. A total of 35% cited U.S. trade agreements, bringing it into the top three responses for the first time. About a third of business leaders listed government regulation and global political instability among their top concerns.
About 60% reported an insufficient supply of appropriately trained workers in the state labor force, and employers identified the top three missing skills or attributes as work ethic (66%), initiative (44%), and being realistic about compensation (43%). The number of business leaders citing problems attracting and retaining employees was down from almost half in the winter survey to about a third in the summer survey. More than half of employers cited the cost of housing among the top factors impacting their ability to attract and retain workers, and a third cited the cost of childcare services. One respondent wrote, “Our labor force is increasingly desperate for childcare and housing resources.” While East and Middle Tennessee business leaders were most concerned with housing and childcare services, West Tennessee employers listed the quality of local schools, the cost of housing and other concerns as their top issues.
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 July 31 and Aug. 22, 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.
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MEDIA CONTACT:
Stacy Estep (865-974-8304, sestep3@utk.edu)
Erin Hatfield (865-974-6086, ehatfie1@utk.edu)