Economic growth in Tennessee has surged ahead of the nation’s pace of growth in recent quarters, according to a new economic study from the Boyd Center for Business and Economic Research at the University of Tennessee.
The study, titled “Tennessee Business and Economic Outlook Spring 2016,” forecasts the direction of the state’s economy by examining economic factors and trends.
“The state economy has seen remarkable improvement in the last several quarters. April’s drop in the unemployment rate was exceptionally good news,” said Matt Murray, associate director of the Boyd Center, member of the Blount County Economic Development Board and the report’s lead author, in a press release about the study.
The state’s unemployment rate dropped to a preliminary rate of 4.3 percent in April, while the national unemployment rate stayed at 5.0 percent.
“Tennessee’s unemployment rate took an unanticipated but welcomed dip to 4.3 percent in April,” the report said, adding that “Tennessee will see the strongest job growth this year dating back to the 1990s.”
Participation rate below national average
Along with the drop in unemployment, the state’s labor force participation rate, which represents the percentage of the population age 16 and older that is either employed or unemployed but actively searching for work, rose from 59.2 percent in 2015 to 60.3 percent in March 2016, according to the study.
As of March, Tennessee had the 10th-lowest labor force participation rate in the country, and was below the U.S. participation rate of 63.0 percent.
“Lower educational attainment and poor health status in Tennessee are two of the most likely contributors to the state’s relatively low labor force participation rate,” the study said. “This will hopefully change in the years ahead given the state’s many efforts to promote educational advancement.”
Economic momentum index
Tennessee ranks sixth on the index of state economic momentum, which ranks states based on income, population and employment growth. The state trails only Utah, California, Oregon, Florida and Nevada, in that order, which shows “some indication of strong economic growth in Tennessee,” the study said.
“Projections point to relatively strong personal income growth and nonfarm job gains for Tennessee that should allow the state to continue to outpace national economic growth over the next two years,” according to the report. “Tennessee should see nominal personal income growth of 5.0 percent both this year and next year, while in the U.S. income growth will be up 3.8 percent in 2016 and 4.8 percent in 2017.”
The study forecasts that the state will see employment gains in the manufacturing sector, while employment in the national manufacturing sector is projected to fall in 2016 and see only “minor gains” in 2017. Manufacturing employment in Tennessee is projected to increase by 2.3 percent in 2016 before slowing to 0.8 percent growth in 2017.
The study forecasts a continuation of “strong taxable sales growth in Tennessee.”
“Following the 6.6 percent growth rate registered in 2015, nominal taxable sales are projected to increase by an additional 5.3 percent in 2016 and 5.1 percent in 2017,” the study said.