Chattanooga's economy bounces back

Chattanooga's economy bounces back

September 20th, 2012 by Dave Flessner in Business Around the Region

Aerial view of downtown Chattanooga.

Photo by Doug Strickland /Times Free Press.

Recovery rank

Most Tennessee and Georgia cities are recovering faster than the average among the 100 biggest metropolitan areas:

• Nashville, 11th fastest growth

• Knoxville, 12th fastest growth

• Chattanooga, 21st fastest growth

• Atlanta, 46th fastest growth

• Memphis, 61st fastest growth

Source: Brookings Institution Metropolitan Policy Program's MetroMonitor index of economic recovery.

Chattanooga's manufacturing-based economy was battered more than most cities during the recession, but a new study shows Chattanooga is bouncing back more than most other cities.

Among America's biggest metropolitan cities, Brookings Institute researchers found Chattanooga ranks among the top quartile in the pace of its recovery from the 2008-2009 recession.

"The recession, in terms of employment in Chattanooga, was very severe," said Alec Friebhoff, a research analyst for the Brookings Institute. "But from those low points, Chattanooga has had better than average growth. There's still a ways to go to get back to where it was, but home prices seem to have stabilized and jobs are coming back, especially in manufacturing."

From the peak reached at the end of 2007, employment shrunk in Chattanooga in the next year and a half by 21,800 jobs, cutting more than one of every 10 jobs in the 6-county metropolitan area from December 2007 until the trough of the recession in the summer of 2009, according to the U.S. Bureau of Labor Statistics.

Since then, Chattanooga has regained 11,500 jobs, or about half of those lost during the recession.

The Brookings study of economic performance in the second quarter showed home prices in Chattanooga were still 0.2 percent below a year ago. But Friebhoff said the recession-induced drop in home values seems to have abated.

"The housing market is showing some signs of stability in the second quarter, but it is still declining slightly," he said.

Chattanooga home prices, on average, rose in the second quarter by 1 percent from the previous quarter - the highest quarterly gain in more than four years. But home prices in Chattanooga have still declined in 13 of the past 16 quarters since the recession hit in 2008, according to the government data compiled by the Federal Housing Financing Agency.

Nationwide, fewer than one in 10 of the largest metro areas in the U.S. have higher home values than five years ago. Selling prices in Phoenix - the hardest hit housing market - are a whopping 46 percent lower than in 2007.

"In the race to recovery, metro areas are running at slow speeds with some tripping along the way," Friedhoff wrote in his report.

Across the 100 largest metro areas, employment growth softened in the second quarter and the rate of output growth slowed. Unemployment rates dropped in about half of the metro areas but still remained above 6 percent in all but 12 metropolitan areas. Eighty seven metro housing markets reached new lows, reflecting a housing market yet to recover.