Optimism In the Air
What is your outlook for the Chattanooga economy in the year ahead?Better - 52.2 percentSame - 32.2 percentWorse - 5.8 percentDon’t know - 8.9 percentIn the next year, how do you expect your personal financial situation to change?Better - 45.3 percentSame - 40.3 percentWorse - 5.9 percentDon’t know - 5.5 percent Compared with a year ago, how is your personal financial situaiton?Better - 31.4 percentSame - 51.4 percentWorse - 16.7 percentDo you think that Chattanooga is headed in the right direction or the wrong direction?68.6 percent - Right direction16.4 percent - Wrong direction15 percent - Don’t know or no answerSource: Election day survey of 360 randomly selected voters across Hamilton County by the Chattanooga TImes Free Press. The survey has a margin of error of plus or minus 6 percent.
As truck shipments and future orders began to slow last summer across a number of industries, Max Fuller thought the U.S. economy was about to stall after more than six years of growth.
"What we saw in our business signaled a recession in early to mid-2017," recalled Fuller, CEO of U.S. Xpress Enterprises, one of the nation's biggest trucking companies. "That all changed after the election of Donald Trump, who is a real game changer. If he does what he says he is going to do to relax regulations, cut taxes and boost infrastructure spending, there's going to be a lot of stimulus and I think you're going to see the GDP (gross domestic product) jump and we should move into an early stage acceleration."
Fuller's optimism echoes what many business leaders expect for the new year, especially in the Chattanooga region where job growth has already been outpacing the national average. Despite rising interest rates and recent cutbacks or closures by some of Chattanooga's biggest employers, most Chattanoogans expect the economy to improve in 2017.
Even as Chattanoogans voted for a change in the White House and voiced concerns about the direction of the country as a whole, most said they think Chattanooga is headed in the right direction and expect the economy to be better in the new year.
Among 360 voters sampled across Hamilton County on election day, more than two thirds of the respondents said they think Chattanooga is headed in the right direction, compared with only one in six who think Chattanooga is going in the wrong direction. A majority of Chattanoogans expect the local economy to improve in 2017 and nearly half of local voters said they expect their own personal financial situation to to get better this year. Less than 9 percent of survey respondents said they expect their financial condition to worsen in 2017.
"When you look at all of the development going on in Chattanooga and the expansion by Volkswagen and its suppliers, it's clear that Chattanooga is moving forward and continuing to get better," says Steve Chappell, who grew up in Chattanooga and has watched its redevelopment over the past three decades. "Cleveland is growing even faster."
Metropolitan Cleveland led Tennessee in job growth during 2016 among the state's major metro cities, adding more than 4,000 jobs last year. The rate of employment growth was slower in Chattanooga but still faster than the U.S. as a whole, according to the U.S. Bureau of Labor Statistics.
Despite job cuts at Alstom, TVA, Invista and Goodman Manufacturing, among others, overall job growth in the Chattanooga region is expected to continue in the new year.
"Tennessee seems to be moving ahead across nearly all industries and we certainly don't foresee a recession in 2017," says Matt Murray, associate director of the University of Tennessee Center for Business and Economic Education.
Rising interest rates will make borrowing more expensive for cars and homes, but most economists still expect both the housing and automotive industries to remain strong. Higher interest rates will actually help the $50 billion-plus investment portfolio of Chattanooga's biggest publicly traded company, Unum Group, and should help profit margins of local banks and other lenders.
Gus Issa, owner of G.T. Issa Construction, one of the region's biggest home building businesses, said mortgage rates remain at historically low levels despite recent increases and he doesn't expect the moves by the Federal Reserve Bank to push up short-term rates should discourage many home buyers.
"I've been a home builder my whole life and right now is a good time to be in Chattanooga," Issa says. "For the next three to four years, I see nothing but more growth for us in Chattanooga from both new residents moving to our area and two-income families moving into higher-price homes."
Miller Welborn, chairman of SmartBank and a mentor for the Dynamo Fund in Chattanooga, said the self-proclaimed "Gig city" also is poised for further growth in its emerging entrepreneurial economy.
"We've had a couple of good years in Chattanooga, but I think we're really on the verge of exploding growth among startup and emerging businesses with the accelerator programs we have and the willingness of successful business people in Chattanooga to reinvest in other ventures," Welborn says. "That reinvestment should spur more jobs and growth so I really think we're only at the starting line, not the finish line."