KNOXVILLE, Tenn. — Tennessee’s economy has stabilized after an abrupt slowdown with no significant change projected into early 1999, says a quarterly forecast by economists at the University of Tennessee.
“Earlier in the decade the state was on the forefront of regional and national economic growth,” economists say in the fall issue of “Tennessee Business and Economic Outlook.”
“Now Tennessee finds itself trailing the region and the nation.”
Tennessee’s economic weakness is broad based and not confined to a single sector of the state’s economy or a single category of personal income, say researchers at the UT-Knoxville Center for Business and Economic Research.
CBER economist Matt Murray said that of all the economic measures examined by researchers, the only one holding up has been taxable sales.
“In view of the slow down in the state’s economy, we would expect sales tax collections would be doing very poorly,” Murray said. “Growth has slowed, but on a year over year basis, collections are still increasing 5 to 6 percent.”
The discrepancy between taxable sales and other indicators sends a cautionary signal, Murray said.
“We must anticipate a slowdown in sales tax collections growth over the next six to 12 months commensurate with the slowdown in the state’s overall economy,” Murray said.
Other report highlights:
— Expect nominal personal income to grow 4.8 percent in 1998 and inflation-adjusted personal income to expand 2.4 percent.
— Tennessee nonagricultural jobs will expand 1.2 percent in 1998 while jobs in the manufacturing sector will fall .9 percent in 1998, “a dramatic improvement relative to the 3.1 percent loss in 1996.” Jobs in services and trades will increase 2.2 percent in 1998.
— Tennessee’s unemployment rate, averaging about 5.2 percent next year, will remain higher than the national rate.
— Tennessee nominal taxable sales will grow 4.9 percent in 1998. Inflation-adjusted sales will be up 2.5 percent.
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Contact: Dr. Matt Murray (423-974-5441)