Slowdown, But Not Recession, in Tennessee's Future

Dec 17, 2018

Credit Brandon Hollingsworth, WUOT News

University of Tennessee economist Matt Murray has seen the same headlines you've seen, warning of inverted yield curves and market instability that some say presage the next recession. But in remarks to reporters Monday, Murray said the broad economic downturn that characterizes a recession is highly unlikely in the next two years.

That's one finding of Murray's annual economic report to the governor. The 2019 assessment says Tennessee's economic growth is expected to continue next year, albeit at a slower pace.

For the state and the U.S.A., one of longest periods of economic expansion in post-World War II history continued in 2018, despite market fluctuations, concerns about tariffs and potential global trade problems ahead, Murray said.

Employment in agricultural and non-farm businesses rose in 2018. Wages still are still lagging, but projections call for natural growth to create nearly 43,000 new jobs in Tennessee next year.

In the next couple of years, uncertainty and instability in global trade may have an outsized effect on Tennessee, a state whose exports in 2017 totaled $33.2 billion. More than 150,000 Tennesseans work for foreign-owned companies that operate in the state.

"Generally, I would argue that [Tennessee's international portfolio] is a very good thing," Murray said. "[But] we're at risk from these brewing trade wars. We're at risk from retaliatory tariffs. We're seeing only anecdotal evidence of the consequences today, so it's very difficult to say how many jobs might be lost or at risk."

It's fashionable to blame millenials for every ill and woe the nation faces. Murray was careful not to do that in his remarks, but he does think the trend of younger people moving to urban areas exacerbates a rural-urban economic divide in the state.

What comes next generationally is unclear. Murray noted young people have different economic patterns than their forebears: lower home ownership rates, less reliance on personal cars and lower employment rates. Whether these are holdover effects from the Great Recession, or a new economic normal, is unknown.

For the first time in eight years, the information contained in the economic report to the governor will be digested by a new governor. Murray told reporters he has not dicussed the content of the report with Governor-elect Bill Lee or his transition staff. He noted Lee will inherit a strong economy, but reiterated his cautions about slowing economic growth and a tightening labor market in the year ahead.