Report reveals Tennessee’s economic change over past year

JACKSON, Tenn. — How did Tennessee’s economy change in the past year?

“In contrast to 2020, which was heavily defined by the pandemic, this year is going to be viewed as a year of recovery from an economic standpoint,” said Dr. Larry Kessler, Research Associate Professor at Boyd Center for Business and Economic Research.

The 2022 Economic Report to The Governor shows consumer spending surged in the first half of the year, helping an incredibly strong economic recovery for most of 2021.

“Tennessee real GDP has fully recovered to pre-pandemic levels already, and we’re projecting very strong growth of 5.6% for the 2021 year as a whole, and then a continuation of strong growth of 4.2% and the following year in 2022,” Dr. Kessler said.

However in Tennessee, there are still 55,000 fewer workers on payrolls than there were prior to the pandemic.

Dr. Kessler says there are a number of potential factors contributing to the slower labor market recovery, including workplace safety, childcare issues, and a dramatic acceleration in retirements.

“The pandemic has given many people time to reflect on their work/life balance, and some have decided to leave to leave the labor force entirely,” Kessler said. “Whether that’s permanently or temporarily, only time will tell.”

According to the report, Tennessee employment is going to continue showing positive growth. The expectations are that employment in the state will fully recover to pre-pandemic levels by the second quarter of 2022.

“We have seen the unemployment rate in Tennessee fall dramatically over the last year or so. So it spiked at 15.8% last spring and has fallen rapidly as the economy recovers average 7.5% for 2020 year as a whole. And we’re projecting it’s going to fall to 3.9% by the end of 2022.”

But Dr. Kessler says with these projections, there is still a risk with the pandemic at hand.

“There still are a number of downside risks to economic growth going forward, including continued supply chain issues, higher prices and new COVID-19 cases and variants. But we have seen that the state economy has proven to be incredibly resilient, and we project strong economic growth in the near term.”

To view the full report, click here.

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