TENNESSEE S ECONOMY: Implications for Economic Development William F. Fox, Director Center for Business and Economic Research The University of Tennessee, Knoxville August 2005
U.S. ECONOMY W.F. Fox, CBER, The University of Tennessee, Knoxville 17
Growth in Quarterly Real Gross Domestic Product (Chained 2000 Dollars) 10.0 8.0 Percent Change from Previous Qtr SAAR 6.0 4.0 2.0 0.0-2.0-4.0 88Q2 89Q2 90Q2 91Q2 92Q2 93Q2 94Q2 95Q2 96Q2 97Q2 98Q2 99Q2 00Q2 01Q2 02Q2 03Q2 04Q2 05Q2 W.F. Fox, CBER, The University of Tennessee, Knoxville 18
Growth in Quarterly Real Personal Consumption Expenditures (Chained 2000 Dollars) 6 Percent Change from Previous Quarter 4 2 0-2 88Q2 89Q2 90Q2 91Q2 92Q2 93Q2 94Q2 95Q2 96Q2 97Q2 98Q2 99Q2 00Q2 01Q2 02Q2 03Q2 04Q2 05Q2 W.F. Fox, CBER, The University of Tennessee, Knoxville 19
Crude Oil and Gasoline Prices $70.00 $2.50 $60.00 Crude Oil Gasoline $2.00 Crude Oil, Dollars Per Barrel $50.00 $40.00 $30.00 $20.00 $1.50 $1.00 Gasoline, Dollars Per Gallon $10.00 $0.50 $0.00 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 $0.00 W.F. Fox, CBER, The University of Tennessee, Knoxville 20
Crude Oil and Gasoline Prices, Inflation Adjusted $80.00 $3.00 Crude Oil, Dollars Per Barrel $70.00 $60.00 $50.00 $40.00 $30.00 $20.00 Crude Oil Gasoline $2.50 $2.00 $1.50 $1.00 Gasoline, Dollars Per Gallon $10.00 $0.50 $0.00 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 $0.00 W.F. Fox, CBER, The University of Tennessee, Knoxville 21
Effective Federal Funds Rate 7.0 6.0 5.0 Rate 4.0 3.0 2.0 1.0 0.0 Jan- 97 Jul- 97 Jan- 98 Jul- 98 Jan- 99 Jul- 99 Jan- 00 Jul- 00 Jan- 01 Jul- 01 Jan- 02 Jul- 02 Jan- 03 Jul- 03 Jan- 04 Jul- 04 Jan- 05 Jul- 05 W.F. Fox, CBER, The University of Tennessee, Knoxville 22
Growth in Quarterly Real Private Nonresidential Fixed Investment (Chained 2000 Dollars) 20 Percent Change from Previous Quarter 10 0-10 -20 88Q2 89Q2 90Q2 91Q2 92Q2 93Q2 94Q2 95Q2 96Q2 97Q2 98Q2 99Q2 00Q2 01Q2 02Q2 03Q2 04Q2 05Q2 W.F. Fox, CBER, The University of Tennessee, Knoxville 23
U.S./Euro Foreign Exchange Rate, and Real Exports Less Imports Exchange Rate 1.4 1.2 1.0 0.8 0.6 0.4 U.S./Euro Foreign Exchange Rate 0.2 Exports less Imports 0.0 9901 9903 0001 0003 0101 0103 0201 0203 0301 0303 0401 0403 0501 0-100 -200-300 -400-500 -600-700 Exports - Imports, Billions of Chained 2000 Dollars W.F. Fox, CBER, The University of Tennessee, Knoxville 24
TENNESSEE ECONOMY in PERSPECTIVE W.F. Fox, CBER, The University of Tennessee, Knoxville 25
TN and U.S. Nonagricultural Job Growth 4.0% Compound Annual Growth 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% TN U.S. 1960s 1970s 1980s 1990s 2000s W.F. Fox, CBER, The University of Tennessee, Knoxville 26
TN and U.S. Nonag Job Growth (Quarter Ending June 2005) 3-month Moving Average 5.0% 4.0% Percent Change, Year Ago 3.0% 2.0% 1.0% 0.0% -1.0% TN U.S. -2.0% -3.0% Jun- 94 Jun- 95 Jun- 96 Jun- 97 Jun- 98 Jun- 99 Jun- 00 Jun- 01 Jun- 02 Jun- 03 Jun- 04 Jun- 05 W.F. Fox, CBER, The University of Tennessee, Knoxville 27
Nonag Employment Growth, MSAs [Quarter Ending June 2004 to June 2005] 2.0% 1.5% 1.0% 0.5% 0.0% Knox Nash Memphis Chat Kingsport- Bristol Total W.F. Fox, CBER, The University of Tennessee, Knoxville 28
Employment Growth, 1979-2004 3.5% 3.0% Annual Growth Rate 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Big MSAs Less Center Counties Non MSA Counties Adjacent MSA Other MSAs Non-MSA Counties Not Adjacent to MSA 4 Largest Counties W.F. Fox, CBER, The University of Tennessee, Knoxville 29
Distribution of Nonag Jobs, 2004 Mfg 11.0% Const 5.3% Financial, Info, Prof & Bus Services 21.0% Mfg 15.4% Const 4.3% Financial, Info, Prof & Bus Services 17.8% Trade, Trans, Util 19.4% Other 4.5% Educ, Health & Social Serv 12.9% U.S. Govt 16.5% Leisure & Hospitality 9.4% Trade, Trans, Util 21.8% Other 4.0% TN Educ, Health & Social Serv 11.9% Leisure & Hospitality 9.4% Govt 15.4% W.F. Fox, CBER, The University of Tennessee, Knoxville 30
Tennessee Job Growth, by Sector [Quarter Ending June 2004 to June 2005] 3% 2% 1% Growth 0% 0.0 0.0-1% -2% -3% Educ & Health Serv Const Financial Activities Leisure & Hospitality Trade, Trans, Util Prof & Bus Services Dur Total Other Serv Nat Res & Mining Govt Non-Dur Infor W.F. Fox, CBER, The University of Tennessee, Knoxville 31
Tennessee Manufacturing Jobs, 1990-2004 350 300 Thousands 250 200 150 Durables Nondurables 100 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 W.F. Fox, CBER, The University of Tennessee, Knoxville 32
High-Tech Employment, 2003 1,000 800 600 400 200 0 CA VA MA GA CO MD NC AL TN KY LA AR MS WV HI WY W.F. Fox, CBER, The University of Tennessee, Knoxville 33
High-Tech Employment as a Percent of Private Employment, 2003 10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% CO VA MA MD CA GA AL NC KY HI AR TN WV LA WY MS W.F. Fox, CBER, The University of Tennessee, Knoxville 34
High-Tech Payroll as a Percent of Total Wages, 2003 15% 12% 9% 6% 3% 0% CO VA MA CA MD GA NC AL KY TN AR WV LA MS WY W.F. Fox, CBER, The University of Tennessee, Knoxville 35
Per Capita Personal Income, Tennessee and Southeastern States, 2004 $40,000 $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $0 MS AR WV SC LA KY AL NC TN GA FL US VA W.F. Fox, CBER, The University of Tennessee, Knoxville 36
TN Per Capita Personal Income As a Percent of U.S., 1988-2004 96% 92% 88% 84% 80% 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 W.F. Fox, CBER, The University of Tennessee, Knoxville 37
POPULATION W.F. Fox, CBER, The University of Tennessee, Knoxville 38
Tennessee and U.S. Compound Annual Population Growth 3% Compound Annual Growth _ 2% 1% 0% TN U.S. 1980s 1990s 2000s W.F. Fox, CBER, The University of Tennessee, Knoxville 39
TN Population Growth, 1990-2004 Less than state average 1.4% 1.4% - 2.0% Greater than 2.0% W.F. Fox, CBER, The University of Tennessee, Knoxville 40
Percent of Population Growth that was Foreign Born 40% 30% 1990s 1980s 20% 10% 0% United States Tennessee W.F. Fox, CBER, The University of Tennessee, Knoxville 41
EDUCATION W.F. Fox, CBER, The University of Tennessee, Knoxville 42
Educational Attainment of the Population 25 Years and Over, Percent With at Least a H.S. Degree, Southeastern States, 2004 100 90 TN = 41st Percent 80 70 60 VA FL GA U.S. SC MS TN AL KY NC WV AR LA W.F. Fox, CBER, The University of Tennessee, Knoxville 43
Educational Attainment of Persons 25 Years and Over, Percent with at Least a High School Degree, 2000 TN = 75.9% U.S. = 80.4% 55.0% to 65.0% 65.1% to 75.9% Greater than 75.9% W.F. Fox, CBER, The University of Tennessee, Knoxville 44
Educational Attainment, Tennessee Metro vs. Non-Metro, 2000 50% 40% 30% Metro Non-Metro 20% 10% 0% Not a H.S. Grad H.S. Degree Some College Associate's Degree At Least Bachelor's Degree W.F. Fox, CBER, The University of Tennessee, Knoxville 45
Average Per Capita Personal Income of Tennessee Counties as a Percent of U.S. Per Capita Personal Income 100 90 TN Counties Below State Avg H.S. Education Attainment TN Counties Above State Avg H.S. Education Attainment 80 Percent 70 60 50 40 30 1970 1980 1990 2000 W.F. Fox, CBER, The University of Tennessee, Knoxville 46
Current Spending Per Pupil for Elementary- Secondary Education, 2002-2003 $10,000 $8,000 U.S. Avg = $8,019 TN = 44th $6,000 $4,000 $2,000 $0 WV VA GA SC LA KY NC FL AR AL TN MS W.F. Fox, CBER, The University of Tennessee, Knoxville 47
TAX STRUCTURE W.F. Fox, CBER, The University of Tennessee, Knoxville 48
State & Local Taxes as a Percent of Personal Income, 2002 12% 10% 8% 6% WV LA KY MS U.S. AR GA NC SC VA FL AL TN W.F. Fox, CBER, The University of Tennessee, Knoxville 49
Actual as Percent of Estimate, Total and General Fund, FY2005 110% 106% total gen fund 102% 98% 94% 90% Aug Sep Oct Nov Dec Jan Feb Mar Apr May June July W.F. Fox, CBER, The University of Tennessee, Knoxville 50
Tennessee State Appropriations, Compound Annual Growth, 1988-2004 16% 12% 8% 4% 0% Personal Income = 5.9% Inflation + Pop = 4.6% Compound Annual Growth, 88-04 - Tenncare / Medicaid Total K-12 Educ Corrections Transportation Higher Educ Health & Environ State Shared Human Services W.F. Fox, CBER, The University of Tennessee, Knoxville 51
U.S. and Tennessee Sales Tax Base as a Percent of Personal Income 70% 60% Tennessee 50% 40% United States 30% 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 W.F. Fox, CBER, The University of Tennessee, Knoxville 52