Despite the economic downturn triggered by the coronavirus, Tennessee business leaders expect the state's economy to improve more quickly than the U.S. as a whole over the next year, according to a new survey of 1,000 business leaders across the state.
Tennessee employers polled in mid August by the Boyd Center for Business and Economic Research at the University of Tennessee said strong business investment and government leadership should help drive Tennessee's recovery faster than the U.S. as a whole. Three of every four respondents said Tennessee is headed in the right direction, even as the state's unemployment rate in July was still nearly three times the historic low reached a year earlier.
"It's not that businesses are saying that the state or the nation will grow really fast in the next year because most expect it's going to take some time to recover from this downturn and they recognize the challenges ahead," said Dr. Bill Fox, director of the Boyd Center and author of a report on the survey released Tuesday. "But the respondents were particularly happy about the potential for business investment and most are pleased with the quality of government leadership here in Tennessee."
Fox said Tennessee's central location, lower cost of living and relatively low tax burden position the state to continue to attract new investment. The Tennessee Valley Authority, which supplies power to Tennessee and helps promote the 7-state Tennessee Valley, said it has helped recruit $7.1 billion of new investment and added 58,400 jobs during the first nine months of fiscal 2020.
Read the UT Boyd Center SurveyView
The UT survey found that nearly one of every six employers in Tennessee have added employees in the past three months.
Tennessee shed 53,445 jobs during April when the coronavirus shut down much of the state's economy, according to the U.S. Bureau of Labor Statistics. But nearly 12,000 of those jobs returned by July and more are expected to come back this fall, Fox said.
President Trump predicted last month that the U.S. will add 10 million jobs in 10 months by tax credits and other incentives to invest in America. But even with such employment gains, the U.S. would still have 3 million fewer jobs than before the pandemic hit the U.S. economy earlier this year.
The Tennessee Business Leaders Survey reported that nearly 63% of businesses stayed open throughout the COVID-19 pandemic and 27 percent remained open with significant restrictions. Only 10% said their businesses were voluntarily closed due to weak demand, and less than 1% were shuttered by government restrictions.
"Businesses are finding ways to adapt and be more efficient through this pandemic," Fox said. "It's going to take some time as a result before we return to the employment levels we saw in February."
Another business survey conducted last month by the Chattanooga Area Chamber of Commerce found that 73.7% of the employers responding to that survey said they have found opportunities to increase efficiency during the pandemic with nearly 48.5% saying they are have reduced variable costs, nearly 38% saying they have reduced fixed costs and nearly 25% saying they have added virtual products.
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Over two thirds of Tennessee business leaders expect the state’s economy to do better than the U.S. economy.
* 12.4% said Tennessee will be considerably better than the U.S.
* 53.5% said Tennessee will be a little better than the U.S.
* 27.1% said Tennessee will be about the same as the U.S.
* 5.4% said Tennessee will be a little worse than the U.S.
* 1.6% said Tennessee will be considerably worse than the U.S.
Source: Boyd Center for Business and Economic Research at the University of Tennessee