UTK’s Boyd Center report shows economic growth will slow, but recession less likely in Tennessee
Despite inflation, Tennessee's GDP is expected to slightly grow in both 2022 and 2023.
Inflation is high, houses are expensive, butter costs too much, and who can even really keep up with the flux of gas prices anymore?
All signs point to a recession. It’s been discussed at length. High interest rates, supply chain pressures, geopolitical instability, and high inflation all come into play when looking at that possibility. But when it comes to the economic impact Tennessee will see, it may not be as bad as the term ‘recession’ makes one think.
This prediction comes from a new report by the Boyd Center for Business and Economic Research at the University of Tennessee, Knoxville (UTK).
“We are more optimistic for the Tennessee economy as more people have moved to the state in recent years, which has provided a boost to economic growth,” said Larry Kessler, Research Associate Professor at the Boyd Center and project director for the 2023 Economic Report to the Governor of the State of Tennessee.
Overall, U.S. inflation-adjusted gross domestic product (real GDP) is expected to fall by 0.2 percent in 2023. Tennessee’s real GDP is forecast to grow by 2.4 percent in 2022 before slowing to just 0.7 percent growth in 2023.
That bigger projected growth in Tennessee than nationwide correlates to the state’s labor market. The Boyd Center report said “as of October 2022, there are roughly 108,000 more workers on Tennessee payrolls than there were before the pandemic, in February 2020. However, slower economic growth in Tennessee will impact the labor market, and job growth is projected to slow from a very strong 3.9 percent in 2022 to only 1 percent in 2023. This is still more favorable than the national outlook, which projects no growth in U.S. payrolls over the next year.”
The report said this is driven by gains in manufacturing and strength in Tennessee’s service sectors, elaborating that “while higher interest rates may slow real estate development, large construction projects on the horizon — such as the development of the Ford electric vehicle complex in West Tennessee and the expansion of the FedEx hub in Memphis — will provide boosts to state construction payrolls.” Tennessee ranks in the top 10 states for advanced manufacturing industries, which will continue to grow in 2023.
The 150-page report, which can be viewed in its entirety here, also highlights how an increase in retirements and declining birth rates will constrain employment growth over the next decade. But positively from an education standpoint, Tennessee’s high school attainment rate among those 25 and older (89.7 percent) is slightly higher than the national average (89.4 percent).
Since 1975, the Boyd Center for Business and Economic Research, housed within UT’s Haslam College of Business, has provided Tennessee’s governor with an annual economic report that includes an in-depth analysis of state and national trends and forecasts.