KNOXVILLE — Tennesseans are likely to see fewer new jobs, a higher unemployment rate, a continued weak housing market and higher gas prices for the rest of this year and the first part of 2007.
Those are among the projections in a report released today by the University of Tennessee’s Center for Business and Economic Research (CBER). This report serves as an update to the annual economic report CBER prepares for Gov. Phil Bredesen.
While slower domestic demand and the absence of serious supply interruptions have allowed gasoline prices to fall some in recent weeks, pump prices are likely to rise again as 2007 arrives.
“Consumers are enjoying some relief at the filling station, but higher prices are on the horizon,” said Matt Murray, CBER associate director and project director, who helped develop the projections.
Mortgage rates already have risen and, as a result, “the nation’s housing market also has weakened appreciably in recent months,” Murray said.
Both the national and state economies will see somewhat lower overall growth largely in response to rising interest rates and high energy costs, the report states.
Overall, the state unemployment rate is expected to be 5.5 percent this year, rising to 5.6 next year in the face of slower job growth.
The state’s manufacturing sector is projected to lose jobs again this year, at the same time the nation adds manufacturing jobs. The report indicates that nearly 8,000 jobs in the manufacturing sector will be lost over the course of 2006 and 2007.
But even with slower job growth and rising unemployment rates, the national and state economies will not retreat into recession, Murray said.
Tennesseans’ personal income will grow by 5.3 percent this year and 5.4 percent in 2007, driven by growth in proprietors’ income.
The report projects the state will see a 1.3 percent growth in non-farm jobs in 2006 and 1.2 percent job growth in 2007. That translates into more than 35,000 new jobs this year and another 34,100 new jobs next year.
The economy should benefit from healthy business investment in computer technology and new facilities, too.
Depreciation of the dollar in international markets also will help. A fall in the dollar makes American-made products less costly to consumers in other countries.
“The decline in the dollar has helped prop up jobs for the nation’s manufacturing sector and help forestall more serious setbacks here in Tennessee,” Murray said.
For the report, visit http://cber.bus.utk.edu
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Contacts:
Matthew Murray, (865) 974-6084, mmurray1@utk.edu