After capturing a record $13 billion of new business investment in 2021, Tennessee's chief economic recruiter says activity remains strong this year and isn't slowing down despite the predictions of most CEOs for at least a mild recession soon.
"Last year was a spectacular year for Tennessee, but we're not seeing any slowdown this year," Stuart McWhorter. commissioner for the Tennessee Department of Economic and Community Development, told Chattanooga business leaders Wednesday. "There's a lot of discussion about whether there is or will be a recession soon or not, but the companies we talk with are still interested in investing significant amounts of money and growing their businesses. These are long-term projects and we are still staying busy."
During the final day of a statewide tour across each of Tennessee's nine regions on Wednesday, McWhorter said Tennessee continues to benefit from its growth in the automotive industry with four major manufacturers either building or planning to make electric vehicles in Tennessee, which has grown to one of the top EV production states in the country.
Last year, Tennessee announced 130 business expansions and locations with a total of over 34,000 new jobs, including the largest economic investment in Tennessee history from the $5.6 billion electric vehicle plant announced by Ford Motor Company near Memphis that is projected to add 5,800 new jobs. Ford's plans for its "Blue Oval" project follow expansions and additional EV production plans by Volkswagen in Chattanooga, which is adding 1,000 more jobs; General Motors in Spring Hill, which has invested $2 billion to make the electric Cadillac Lyriq, and the Nissan plant in Smyrna, where the all-electric Leaf is produced at one of the largest automotive plants in the country.
In his first public event as the state's economic development commissioner last month, McWhorter came to Chattanooga in July to announce a $24.2 million expansion planned by the California-based repair service iFixit, which is adding a distribution and production facility in Chattanooga's Onion Bottom that will add over 200 jobs.
Charles Wood, director of economic development at the Chattanooga Area Chamber of Commerce, echoed McWhorter's optimism.
"I see no signs of a slowdown in Chattanooga," Wood said in an interview with the Times Free Press. "Business activity is at a really quick pace and as we talk with most companies right now, they are still hiring which is a sign that they remain busy and optimistic. We have a number of projects that we are working on right now."
The recruitment pipeline remains busy despite early signs of a slowdown in the pace of economic growth as the Federal Reserve Board raises interest rates to help slow inflation and the pace of economic growth.
The Conference Board reported Wednesday that CEO confidence in the economy declined for the fifth consecutive quarter, falling to lows not seen since the start of the COVID-19 pandemic in 2020. Among CEOs responding to the survey, 81%said they were preparing for a brief and shallow recession, while only 7% said they do not expect a recession.
"CEOs are now preparing for the near-inevitability of a U.S. recession by year-end or in 2023," Roger W. Ferguson, Jr., vice chairman of The Business Council and Trustee of The Conference Board., said in a report Wednesday. "However, the vast majority expect the downturn to be brief and shallow--compared to just 12% expecting a deep recession, with material global spillover."
Even business starts are showing signs of slowing after years of steady gains in Tennessee. The Tennessee Secretary of State reported this week that new entity filings in the state fell 1.3% year-over-year in the second quarter of 2022.
But new entity filings in the second quarter of this year were still up 59.4% from the second quarter of 2020 and were 71% above where they were in the same quarter in 2019.
"Tennesseans are still starting businesses at a historically high level, and that means nothing but good things for employment and personal income here in Tennessee," said Don Bruce, director of the Boyd Center for Business and Economic Research at the University of Tennessee.
McWhorter said his office tries to sell the long-term advantages of Tennessee, which is centrally located and has a lower cost of living and no state income tax. McWhorter said in talking with his long-time friend Gov. Bill Lee, he is focused on what the state will be like in 15 to 20 years, not just the next few years while Lee is governor, if Lee is re-elected as expected this fall.
"We're trying to make investments that will impact Tennessee for the long term," McWhorter said.
Contact Dave Flessner at email@example.com or at 423-757-6340. Follow on Twitter at @Dflessner1
tinue to foster strong tax revenue growth for the state."