State earns good marks for economy
The Tennessee economy performed well in 2016, with a 2.7 percent gain in manufacturing employment, according to a report released by the University of Tennessee. The UT Boyd Center for Business and Economic Research said in its 2017 Economic Report to the Governor of Tennessee, that nominal personal income growth in Tennessee matched the national growth of 3.6 percent in 2016. However, in 2015, the state outstripped national growth by more than 1 percent.
Matt Murray, associate director of the Boyd Center and project director for the economic report, summarized it as an overall positive assessment of the state’s economy.
“We’ve had very strong job growth,” he said. “Job growth in Tennessee last year was about 2.4 percent. We’ve had very strong growth in manufacturing employment last year, which is very, very encouraging. The labor markets here in Tennessee and across the nation have become very tight. The employment rate, being low, is an indication of that, but we are also seeing rising wages.”
The report, which relied on the work of nearly every department in the Boyd Center, plus outside experts, was sent to the state’s Department of Economic and Community Development, Murray said. Since 1975, the center has prepared the annual economic study, and it is closely read by many in government and in businesses in Tennessee, he said.
“Now, more than ever it is a great time to be a Tennessean,” Randy Boyd, state economic and community development commissioner, said in a statement. “More Tennesseans have jobs than ever before, our citizens are more educated, and our household income is the highest in the state’s history.”
The state’s labor market has been especially resilient, according to the report, with non-farm employment increasing 2.4 percent in 2016 compared with a 1.8 percent increase for the U.S. during the year.
Meeting with reporters, Murray was asked about how policies of President Donald Trump might impact the state’s economy. There are a lot of uncertainties, and a lot will depend on how closely Congress embraces some of his proposals, Murray said.
“We do expect to see tax cuts for both businesses and households that will stimulate economic growth. We expect to see an infrastructure plan that would also cause short-term growth to accelerate a bit. Having said that, the economy is going to be constrained by a tight labor market.
A Trump campaign promise to impose 35 percent tariffs on imports from Mexico and 45 percent on imports from China could pose problems, he said.
“If those policies were, in fact, enacted, most economists have concluded it would lead to a global economic downturn,” Murray said. “I don’t think Congress will be supportive of tariffs of that magnitude. I think the threat is still there, but in the end I think that if we see tariffs, they will be more targeted to particular products, but not to entire countries and all imports from those countries, and I would expect those tariffs to be more modest than what Trump proposed.”
In other highlights of the report, the state’s unemployment rate is expected to average 4.8 percent in 2017 and 4.6 percent in 2018 and fall to 4.5 percent by 2022.
Aside from uncertainty over Trump administration policies, Murray said that tightening of the labor market because of an aging population and increasing number of retirees will put some constraints on additional growth, but he believed the state economy will continue to show improvement.
“Our economy in Tennessee is arguably one of the healthiest and best performing economies across the country.
Source: Knoxville News Sentinel, by ED MARCUM
The East Tennessee Economic Development Agency markets and recruits business for the 15 counties in the greater Knoxville-Oak Ridge region of East Tennessee. Visit www.eteda.org