Source: University of Tennessee | Lydia McCoy & Tyra Haag | January 26, 2017
The Tennessee and U.S. economies are projected to stay on “steady footing” in 2017, but some unknown factors, like a new administration and Congress, could have an effect on the path of growth, according to a report released today by the Boyd Center for Business and Economic Research at the University of Tennessee, Knoxville.
“In general, I think the economy will continue to show improvement,” said Matt Murray, associate director of the center and project director for the 2017 Economic Report to the Governor of the State of Tennessee. “But tighter labor markets will be a constraint on the capacity for additional growth. There is also some uncertainty regarding the fiscal policies of the new administration.”
Murray said that any surge in growth could be greeted by higher interest rates, inflation and exchange rates.
According to the report, consumer spending will remain the backbone of economic growth in the U.S., growing by 2.8 percent in 2017 and benefiting from a tightening labor market and rising wages.
The housing market in the U.S. will continue its slow growth, and residential fixed investment will increase by 2.7 percent in 2017 and 3.1 percent in 2018, according to the report.
U.S. gross domestic product is on track to grow steadily in 2017 and 2018, with increases of 2.3 and 2.6 percent, respectively, according to the report.
Tennessee is projected to see more job growth, and its unemployment rate should remain under 5 percent in 2017 and 2018.
Other highlights from the report include:
- In Tennessee, nonfarm jobs should be up 1.4 percent in 2017 and 1.2 percent in 2018. Manufacturing will see job gains of less than 1 percent in both years.
- The state’s unemployment rate will average 4.8 percent in 2017 and 4.6 percent in 2018.
Over the next 10 years, Tennessee’s population is projected to grow at a rate of 1 percent per year, matching the forecast population growth of the nation.
- The state’s unemployment rate will continue its slow downward trend, with the annualized unemployment rate to rest at about 4.6 percent for most of the decade before falling to 4.5 percent in 2022.
- The report also looks at how pending retirements from the baby boom generation – retirees currently aged 52 to 70 – will affect the Tennessee economy over the next 15 years. Projections are that the number of retirees will increase between 80 and 100 percent over that time.
“The economic forecast is an essential planning tool for state and local governments in Tennessee as well as the business community,” Murray said. “It is encouraging that we are looking forward to continued economic expansion.”
Since 1975, the Boyd Center for Business and Economic Research has provided Tennessee’s governor with an annual economic report, which provides an in-depth analysis of state and national economic development trends and forecasts.
“Now more than ever it is a great time to be a Tennessean. More Tennesseans have jobs than ever before, our citizens are more educated and our household income is the highest in the state’s history,” said Randy Boyd, commissioner of the Tennessee Department of Economic and Community Development, which commissions the report.
“While we certainly have a lot to be proud of, we must remember that our success isn’t spread equally across the state and there’s still much left to do. As we celebrate the progress our state has made over the past year, we must focus on continuing our efforts to boost all areas of the state so that opportunity and success are things that can be shared amongst all Tennesseans for years to come.”
The Boyd Center for Business and Economic Research is housed within UT’s Haslam College of Business.