Despite an increase in the local jobless rate last month, Tennessee's economy should continue to improve this year and next, keeping the jobless rate below 5 percent and giving most workers their biggest wage increases in years.
"We saw as 2016 closed out, wage rates rising at a faster pace, and I would expect that to continue for at least the next couple of years," said Matt Murray, associate director of the Boyd Center for Business and Economic Research at the University of Tennessee, which released its annual economic forecast Thursday. "Tight labor markets are going to contribute to further rises in average hourly earnings. Wages have been stagnant since the Great Recession, so these increases should be really good news for American workers."
Murray and other UT economists predict employment in Tennessee will grow another 1.4 percent this year and 1.2 percent next year. Although slower than the job growth in 2016, the employment gains this year should keep Tennessee's unemployment rate to an average of 4.8 percent in 2017 and 4.6 percent next year, even as the population of the state continues to grow.
Murray said higher interest rates, inflation and exchange rates could limit some growth in the next year.
"But I don't see anything short of some unexpected shock that would derail another year of growth," Murray said.
Over the next 10 years, Tennessee's population is projected to grow at a rate of 1 percent per year, matching the forecast population growth of the nation.
The Tennessee Department of Labor and Workforce Development reported Thursday that unemployment edged higher in both metropolitan Chattanooga and Cleveland, Tenn., last month as employment shrank at the end of 2016 across Southeast Tennessee.
Chattanooga's jobless rate rose by two tenths of a percentage point to 5 percent, topping the U.S. jobless rate. The number of employed Chattanoogans fell last month by 2,220 workers as the Christmas holidays approached and more workers were idled or their jobs phased out.
In metro Cleveland, unemployment rose by three tenths of a percentage point to 4.4 percent, with a drop of 880 jobs at the end of the year.
But over the past year, Chattanooga added 5,950 jobs, growing employment 2.5 percent in 2016, while metro Cleveland added 6,720 jobs, growing employment by nearly 12.7 percent.
Metro Cleveland has led the state in job growth for most of 2016, and the Cleveland area continued to have a jobless rate below the comparable, non-seasonally adjusted rate of 4.9 percent last month across all of Tennessee.
Tennessee's jobless rate rose from the springtime low of 4.1 percent reached last April to end the year at 4.9 percent.
Across the Volunteer State, the jobless rate was lowest last month in Williamson County at 3.5 percent and highest in Clay County at 7.4 percent.
In the Chattanooga region, unemployment was lowest in Bradley County at 4.2 percent and highest in Rhea County at 9 percent.
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Tennessee — 4.9 percent, up 0.3 percent
- Bradley — 4.2 percent, up 0.2 percent
- Hamilton — 4.8 percent up 0.2 percent
- Coffee — 4.9 percent, up 0.2 percent
- Franklin — 5.3 percent, up 0.3 percent
- McMinn — 5.6 percent, up 0.3 percent
- Polk — 5.8 percent, up 0.7 percent
- Sequatchie — 6.1 percent, up 0.4 percent
- Marion — 6.5 percent, up 0.2 percent
- Meigs — 6.7 percent, up 0.4 percent
- Grundy — 7.3 percent, up 0.4 percent
- Bledsoe — 7.6 percent, up 0.9 percent
- Rhea — 9 percent, up 1.2 percent
Georgia — 5.2 percent, up 0.2 percent
- Catoosa — 4.7 percent, up 0.2 percent
- Dade — 5.1 percent, up 0.2 percent
- Walker — 5.3 percent, up 0.3 percent
- Whitfield — 5.7 percent, up 0.1 percent
- Chattooga — 6.1 percent, up 0.4 percent
Sources: Tennessee Department of Labor and Workforce Development and the Georgia Department of Labor