KNOXVILLE, Tenn. — A sharp improvement in Tennessee’s economic indicators for April provides more evidence that ”recovery from the recession is imminent,” a University of Tennessee economist said Friday.
Dr. David Mandy reported that Tennessee’s index of leading economic indicators rose at a 15.4 percent annual rate to its highest level since last August. The leading index forecasts conditions six to nine months ahead.
The state’s April coincident index, an indication of current economic conditions, ”verifies the strength displayed by the leading index several months ago,” Mandy said. The coincident index rose at a 12.7 percent annual rate in April.
”What the leading index is saying now, fairly clearly, is that recovery is going to happen in the next six months or so,” Mandy said. ”The problem that we face at the moment is that there is still a lot of weakness, particularly on the part of consumers. They’re simply not spending yet in the state of Tennessee.”
Weak retail sales and a rise in unemployment claims in April suggest ”the recovery has not yet substantially benefitted consumers,” Mandy said.
Among the strengths in Tennessee’s April leading index were positive signals from the construction industry and a third straight monthly improvement in the U.S. index.
”While it is premature to say that the recovery has begun in Tennessee, the magnitude of the increase in the coincident index, in conjunction with the overall improvement of the leading index so far this year, provides reason for optimism,” Mandy said.
”Since the strength of the Tennessee economy tends to parallel that of the U.S. economy, it is doubtful that the state can generate a significant recovery in the absence of one on the national scale,” Mandy said.
”Thus, the strength or weakness of the U.S. leading and coincident indicators in May will be of particular interest.”
Mandy said continuing improvement in both the state and national leading indexes will point to recovery.
”However, the recovery will not be realized until both coincident indexes (those measuring current conditions in Tennessee and the U.S.) establish upward trends.”