KNOXVILLE, Tenn. (WATE) — The U.S. economy will experience a minor recession in 2023, but the recent influx of new residents will help keep Tennessee’s economic growth from slowing as dramatically, according to experts in this year’s Economic Report to the Governor of the State of Tennessee.
The report is prepared by the Boyd Center for Business and Economic Research and the Haslam College of Business at the University of Tennessee each year for the state policymakers.
The 47th edition of the annual report joins other voices in forecasting the nation’s inflation-adjusted gross domestic product (real GDP) shrinking by 2% in the first quarter of 2023, followed by an additional 0.4% in the second quarter — meeting the definition of a recession. A recovery is forecast in the second half of the year.
Meanwhile, Tennessee’s economy is expected to outperform the nation, due in part to the large influx of new residents. This state’s real GDP is forecast to advance by 0.7% in 2023, with long-term projections showing real GDP growth slowing to 2.1% per year through 2032.
Both the state and national economies are seeing impacts on real GDP from high-interest rates, supply chain pressures, geopolitical instability and high inflation.
“We are more optimistic for the Tennessee economy as more people have moved to the state in recent years, which has provided a boost to economic growth,” said Larry Kessler, research associate professor at the Boyd Center and project director for the report.
More people moving into the state helps to prop up consumer spending and, in turn, keeps state GDP from turning negative in the near term, the report states. A study released by the University of Tennessee in March estimates the state’s population growing by 1 million over the next two decades, reaching nearly 8 million by 2040.
What is the Boyd Center report?
It is the 47th in a series of annual reports compiled at the request of state government officials, who use the economic analysis to ensure consistency in planning and budgeting efforts across departments. The data also becomes part of policy development and strategic decision-making.
The report provides evaluations on the five major sectors of the Tennessee economy, an agriculture section from the University of Tennessee Institute of Agriculture, and an assessment of advanced manufacturing in the state.
Research Associate Professor Lawrence Kessler is the project director of the Boyd Center for Business and Economic Research. The report was prepared in cooperation with the Tennessee Department of Finance and Administration, Tennessee Department of Economic and Community Development, Tennessee Department of Revenue, and the Tennessee Department of Labor and Workforce Development.