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Local Economic Conditions. David A. Penn, Director Business and Economic Research Center Jennings A. Jones College of Business Belmont University February 2, 2005. Tennessee by Comparison . Industrial Structure Manufacturing sector is very important Health care important

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local economic conditions
Local Economic Conditions

David A. Penn, Director

Business and Economic Research Center

Jennings A. Jones College of Business

Belmont University

February 2, 2005

slide2

Tennessee by Comparison

  • Industrial Structure
  • Manufacturing sector is very important
  • Health care important
  • Government is much less important
slide3

Tennessee by Comparison

Manufacturing

Employees’ earnings

Tennessee: 17.9%

Southeast: 12.8%

U.S.: 13.2%

Tennessee ranks 8th in share of nonfarm earnings from manufacturing.

slide4

Tennessee by Comparison

Health care and social assistance

Employees’ earnings

Tennessee: 11.5%

Southeast: 9.5%

U.S.: 9.5%

slide5

Tennessee by Comparison

Government

Employees’ earnings

Tennessee: 13.4%

Southeast: 18.6%

U.S.: 16.2%

overview
Overview
  • Uncertainty
    • Improved earlier last year
    • Now increasing
  • Major Factors
    • Muddled consumer and business confidence
    • Energy prices
    • Lagging employment growth
consumer and business confidence
Consumer and Business Confidence

Interest rate outlook

Iraq war

Terrorism

Confidence?

Earnings outlook

Aging of the population

Energy prices

Job outlook

Home equity

Investment spending

gasoline prices
Gasoline Prices

Spending more for gasoline results in less spending for other items.

interest rates
Interest Rates

Fed policy is becoming less accommodating.

consumer confidence
Consumer Confidence

Drifting higher since the recession, but not steadily.

manufacturing
Manufacturing

PMI drifting lower, but still indicates expansion.

indicators for the local economy
Indicators for the Local Economy
  • Nonfarm employment
  • Unemployment rate
  • Taxable sales
  • Housing and real estate
indicators for the local economy1
Indicators for the Local Economy
  • Nonfarm employment
  • Unemployment rate
  • Taxable sales
  • Housing and real estate
nashville msa payroll employment
Nashville MSA Payroll Employment

Employment has improved beyond its pre-recession peak.

nonfarm employment
Nonfarmemployment

Modest job growth: Nashville MSA up by 1.0% from year ago.

Year to year percent change

nonfarm employment1
Nonfarmemployment

Modest job growth: Tennessee employment growth drifting lower.

Year to year percent change

nonfarm employment2
Nonfarmemployment

U.S. employment rising faster than locally.

Year to year percent change

nonfarm employment3
Nonfarmemployment

Nashville MSA compared with other MSAs of similar size

manufacturing durables
Manufacturing Durables

Durables manufacturing growth is relatively robust.

manufacturing non durables
Manufacturing Non-Durables

Growth of non-durables manufacturing briefly moved into positive territory.

nashville retailing
Nashville Retailing

Hit hard during the recession, retailing employment continues to weaken.

educational and health services
Educational and health services

Very strong coming out of the recession, educational and health services growth remains good.

rutherford county
Rutherford County
  • Payroll employment grew 8.5% June 2003-04
  • Ranked #1 among 315 largest counties in the U.S.
  • Rose 7.3% March 2003-04; ranked #2 among largest counties
  • Fourth highest December 2002-03 (4.6%)
  • Sixth highest growth June 2002-03
indicators for the local economy2
Indicators for the Local Economy
  • Nonfarm employment
  • Unemployment rate
  • Taxable sales
  • Housing and real estate
unemployment rates
Unemployment rates

Lower in Tennessee than nationally.

November 2004 (2003)

U.S. 5.4% (5.7%)

Tennessee 5.2% (6.0%)

Nashville MSA 3.9% (4.3%)

Memphis MSA 6.4% (6.1%)

slide28

Unemployment Rate by County 2004

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5

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7

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5

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7

%

-

8

.

3

%

8

.

3

%

-

1

3

%

indicators for the local economy3
Indicators for the Local Economy
  • Nonfarm employment
  • Unemployment rate
  • Taxable sales
  • Housing and real estate
taxable sales growth

Sales slowed in the second and third quarters following a strong first quarter. Figures for November show improvement.

Taxable Sales Growth
slide35

Growth of Taxable Sales, 2003-04 Second Quarter

P

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-

1

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%

1

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%

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1

8

.

5

%

indicators for the local economy4
Indicators for the Local Economy
  • Nonfarm employment
  • Unemployment rate
  • Taxable sales
  • Housing and real estate
permit authorized residential construction 2003 04
Permit-Authorized Residential Construction 2003-04

Activity in Davidson County picking up the pace.

building permits
Building Permits

Nashville MSA housing construction activity volatile after gangbuster first quarter.

rutherford county housing units
Rutherford County Housing Units
  • Added more housing units in 2003 than six states.
  • Rutherford County ranked in top 100 U.S. counties in housing unit growth for 2003 – Census Bureau
  • Implications for public services.
realty transfer tax
Realty Transfer Tax

Activity up 20% from 2003, except for September.

realty transfer tax november 2003 04
Realty Transfer TaxNovember 2003-04
  • Tennessee: +35.9%
  • Nashville MSA: +23.8%
growth of schools
Growth of Schools

Student population increase 2002-2003:

  • +14,674 in Tennessee (+1.5%)
  • +3,970 in the donut counties (+3.9%)
  • +1,450 in Rutherford County (+5.2%)

Measured by net enrollment

school expenditures and revenues
School Expenditures and Revenues
  • Spending per ADA rising 4.6% annually in donut counties 2000-03.
  • Operating expenditures rising 7.3% annually for the donut counties.
  • About 56% of revenue growth 2000-03 is from local sources.
how to pay for new schools
How to Pay for New Schools?
  • Options (something for everyone to hate):
    • New revenues
    • Slower growth
    • Cut other spending
    • Property tax hikes
expectations
Expectations
  • Recovery of the U.S. economy must continue.
  • Need better performance from investment spending, net exports.
  • Interest rates will continue to drift higher.
  • Sustained growth in Europe, Canada, and Mexico would be helpful.
u s markets
U.S. Markets
  • Gently rising mortgage rates (up 0.5 in 2005)
  • Housing starts down 7% in 2005, 8% in 2006
  • Mortgage originations down 15% in 2005, 7% in 2006
  • Refinancings down 40% in 2005, 23% in 2006
    • Source: Mortgage Bankers Assoc.
business and economic research center jennings a jones college of business
Business and Economic Research Center Jennings A. Jones College of Business
  • Publications
  • Data
  • Contract Research
  • Outreach
publications
Publications
  • Tennessee’s Business - Professor Horace Johns
  • Election 2004 (forthcoming)
  • People Who Keep State Government Running
  • Tennessee Lottery
publications1
Publications
  • Global Commerce - Professor Steven Livingston
  • China Takes the Stage
  • Free Trade Agreements
  • Trade Wars
publications2
Publications
  • Midstate Economic Indicators
    • Issued quarterly
    • Second quarter in print
business and economic research center
Business and Economic Research Center

David Penn, Director

dpenn@mtsu.edu

615-904-8571