According to a report issued by UT’s Center for Business and Economic Research, the nation is out of the recession but not the woods.
The report, “The Tennessee Business and Economic Outlook: Fall 2009,” was financed in part by the state Department of Finance and Administration, the state Department of Economic and Community Development, the state Department of Revenue, the state Department of Labor and Workforce Development, and the Appalachian Regional Commission.
“The national economy is now out of the recession, but this means the economy has found a trough from the beginning of the recession in December 2007,” Matt Murray, associate director of the Center for Business and Economic Research and author of the report, said.
The report examines Tennessee’s economy as well, and the state looks worse than the nation as a whole. “Growth is not likely to be very vibrant in the quarters ahead, and the labor market will be slow to recover,” Murray said. “So unemployment rates will remain very high into 2011.”
Because the impacts of “The Great Recession” are so extensive, many are affected within the state and across the country. “Young people will find jobs harder to find,” Murray said. “Homeowners have lost some of the value of their home. Anyone with stocks is worse off today than last year. Unemployment rates are up for all groups of society, especially those with little formal education.”
Overspending on housing by consumers and the collapse of financial markets has caused the short-term downturn in growth. The report states that a turnaround is expected in the third quarter “as monetary policy, a second fiscal stimulus package and improved housing market conditions lift the economy from the bottom.”
However, according to the report, “… there are concerns that the economy’s rebound will be delayed until the end of the year or early 2010.”
“Ultimately we will need stronger consumer spending to maintain growth,” Murray said. There are concerns that the consumer will not be able to pick up the slack in the economy when fiscal stimulus winds down in two years.
“Some economists are calling this the ‘new normal,’ which means we really don’t know what the world will look like in another two years,” Murray said.
The state and country’s long-term economic situation is even harder to predict. It is significantly impacted by short-term growth, as well as investments in human capital, such as education; machinery, equipment and software; and population growth.
The report addresses the advantage education gives.
“Education is especially important to economic well-being,” the report reads. “Tennessee counties with well-educated adult populations enjoy lower rates of unemployment, higher rates of job creation and higher levels of per capita income than their more poorly educated counterparts.”
The report emphasizes the fact that each recession of the 20th and 21st centuries has been unique. Each has arisen and been resolved through particular sets of circumstances and actions: