UT Economist Looks at the Recession in Tennessee

Jan 4, 2021

The sudden onset of the pandemic recession in Tennessee is shown in this graph. The recovery so far has been slow and unsteady.

The plunge was sudden and steep. Tennessee's economic activity abruptly fell off in late March as consumers wary of a new and mysterious virus stayed home. Tennesseans are now more likely to venture out of the house, but the consumer habits that changed early in 2020 have stayed that way, says economist Larry Kessler. Those changes, plus the uncertainty over timing and availability of COVID-19 vaccine distribution, makes the economic recovery slow, uneven and hard to predict.

Kessler, the lead author of an annual economic report to the governor's office, says Tennesseans have largely stuck to the purchasing changes they adopted nearly a year ago. That means buying goods, but not services -- especially services that require in-person contact, such as in-restaurant dining and haircuts. Those changes mean a somewhat lopsided recovery: sales tax revenues for taxable goods are outperforming expectations, while in-person services including tourism and dining continue to struggle.

For a look at the recession so far and what 2021 may bring, Kessler spoke with WUOT's Brandon Hollingsworth.