Ask anyone you meet on the street if they think we’re on the road to recovery or still in recession, Chances are about half will say we’re still in recession.
Currently, a little more than one-in-four people say they have no confidence in government economic data. But while everyone is entitled to their opinion, no one is entitled to their own set of facts.
I’ll be the first to admit that most often used economic data is not that good. The monthly Household Survey used to calculate the unemployment report is a prime example. It’s a small sample, and while it’s reasonably accurate on the national level, the same can’t always be said for the local level. It also has some questionable ways of defining employed, but that’s another story.
Simply put, unless there’s agreement on the baseline economic data there will never be a consensus on where we are or what needs attention.
One of the best ways to keep track with the economy – local and national – is the annual gross domestic product. It’s the value of goods and services produced during a year.
On the national level, you can get almost real-time quarterly GDP. On the local level, you have to wait a year. From that perspective, it’s useful to plot a trendl.
The most current data available from the Bureau of Economic Analysis shows the Johnson City MSA posting small year-over-year gains. At the same time, Kingsport-Bristol is showing three straight years of decline and a four-year tend slide that began in 2011. The trend turned higher in 2015, but it would take more than one data-point to say things are rosy.
If you look at the 2015 GDP compared to the most current year high Johnson City’s two-year gains, haven’t gotten it back to the pre-recession level. It’s still 1.1% shy of that mark.
Kingsport-Bristol’s GDP bounced back from the recession fairly quick and peaked in 2011. But the year after it did its version of Ground Hog Day by ducking back in a hole and doing a three-year retreat. In total chained dollars, 2015 is a little better than it was in 2007, but the trend isn’t encouraging. It’s also noteworthy what the GDP trend in the Johnson City MSA followed Kingsport-Bristol’s Ground Hog Day pattern, but the decline wasn’t as deep and the recovery was better.
I suspect part of this can be traced back to the demographic effect. Our region is aging rapidly. And when your population ages your economy becomes less productive.
There’s no argument that things are looking pretty good at this point in time, but the big picture – as defined by GDP – shows a painfully slow recovery. And no one can argue that what recovery has happened left a good part of the local population behind.
Still, the economy is showing growth signs. Land for new residential and commercial development is being prepared. The 2015 Census recorded the biggest increase in household incomes since the recession.
A year and a half ago existing home sales took off like a rocket. But that growth rate is slowly beginning to trend lower because it’s not sustainable.
The primary component for housing market growth is absent in all but one Tri-Cities county.
I say that because the Tri-Cities has a negative natural population growth status. The death rate is higher than the birth rate. The only population growth is newcomers, and most of that is going to Washington County. It could be argued that Carter County is poised to seep some spill-over from Washington County, but those numbers are not in, yet.
The 2015 Census shows Washington was the only local county with a population grain from 2014.
That means pent-up demand and our commuter pattern is driving existing home sales. And we’re a region with a wicked commuter pattern. Every morning 88,000 people in the three major cities get up and drive to work someplace other than where they live.
Homeowners who are equity rich have a higher local share than the national average
And almost half of the local homes are mortgage free.
New homes are being built, but new home construction is underperforming its pre-recession level by half.
Retail sales and sales tax collections are growing thanks to some wage growth and a big consumer boost via lower gas prices.
September’s local labor market report isn’t available yet but as of August were still adding jobs, but like home sales the rate of growth is beginning to decline.
Look at it this way:
The unemployment rate is at pre-recession levels. But…
- In August, there were here are 2,400 fewer nonfarm jobs than in August 2008.
- There are almost 16,000 fewer people employed than during the pre-recession benchmark.
- The labor force has declined by 18,600 people when compared to August 2008.
- Almost 46% of our population over the age 18 is not in the labor force.
Since the recession 635 local businesses had closed by the end of 2014.
We know there have been many new businesses since then. Others have closed. There won’t be an accurate tracking of that churn until the 2015 Census Business Patterns is available from the Census Bureau.
Weak business spending, global headwinds, and a dysfunctional national government are the top concerns. Foreign trade is a hot button. But remember, Tennessee leads the nation in direct foreign investments.
The long view is one of a declining population and stagnation is a very real possibility unless local political and business leaders find and encourage the economic and political will to work on some solutions.
It’s all about jobs and population growth. Many experts say solutions will come on the local level. The cities and counties that get it right will flourish.