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Tri-Cities economy looks good, but….. Benchmarking the recovery, looking for a new normal

Local employment rates are at historic lows. Homebuilders are the busiest they’ve been since the recession, and there are ample signs of new commercial developments and renovations underway. Consumers are confident and spending. All-in-all the local economy looks pretty good. But what looks good on the surface can be deceiving – especially when you’re still recovering the worst economic downturn since the Great Depression.

Still is the operative word because it acknowledges that the local economy is still seeking a new normal.

The fundamentals of the two Metropolitan Statistical Areas that make up the Tri-Cities have inched toward recovery, but a check of the basics show it’s not there yet. And there’s a caveat that has to be considered. Most discussions about recovery use pre-recession benchmarks. The problem with that is the local economy will likely never return to some pre-recession levels.

Our labor force is older and getting progressively older every day. The labor force participation rate is ebbing toward 50%, and productivity is down. Using per capita gross domestic product (the total goods and service output) as a productivity metric shows it has been down five times in the past eight years in both MSAs. Compared to the last high it has declined $3,719 in Kingsport-Bristol and $1,917 in the Johnson City MSA. Some – but not all – of that is a condition of an aging labor force. Bottom line: You can’t grow an economy when productivity is declining.

And then there’s the reality that some of the mainstays of the local pre-recession economy are gone for good. What all of this means is the local economy is still seeking its new normal where the service and healthcare sectors are the primary economic drivers instead of manufacturing and goods production.

With that said, it’s important to look at what things looked like before the recession and how they’ve evolved to begin getting a picture of the new normal that’s evolving. That’s why the annual Business Patterns report from the Census Bureau is so important. Other reports give good monthly and quarterly looks at employment, sales tax collections, and home sales. But the annual Business Patterns is a more detailed dive into how many and what type of businesses are driving today’s economy.

Here’s a quick look at how the Tri-Cities economy looks according to the current Business Patterns Reports compared to the year before the Great Recession began.

TOTAL NUMBER OF BUSINESS IS DOWN

There are 635 fewer businesses in the seven-county region than there were before the recession.  Those businesses have 14,995 fewer employees and an annual payroll that is $1.02 billion more than it was before the recession.

SECTORS THAT INCREASED OUTLETS

Here are the types of businesses that have increased.

Accommodations and food services – up 69.

Health care and social assistance – up 44.

Educational services – up 17.

Mining, quarrying, oil and gas extraction – up 11

Utilities – up 4.

Information – up 1.

 SECTORS THAT LOST OUTLETS

Here are the types of businesses that now have fewer outlets:

Construction – down 197.

Retail trade – down 173

Other services – down 123

Manufacturing – down 84

Transportation and warehousing – down 57

Professional, scientific and technical services – down 43

Wholesale trade – down 37

Administrative, support, waste management, and remediation services – down 24

Real estate, rental, and leasing – down 23

Management of companies – down 12

Arts and entertainment – down 11

Agriculture, forestry, fishing, hunting – down 9

Finance and insurance – down 4.

SECTORS THAT ADDED EMPLOYEES

A frequently asked question is where are all these new jobs that have been created? Here’s how business sectors look based on those that increased workers since the recession.

Health care and social services – up 2,566.

Transportation and warehousing – up 974.

Management of companies – up 431.

Education services – up 216.

Accommodation and food services – up 185.

SECTORS WITH FEWER EMPLOYEES

Here’s the rundown by sectors that lost workers during the recession and recovery.

Manufacturing – down 7,841.

Professional, scientific and technical services – down 2,724.

Construction – down 2,586.

Other services – down 1,337.

Administrative, support, waste management, and remediation – down 1,322

Wholesale trade – down 1,117.

Finance and insurance – down 1,031

Retail trade – down 675.

Information – down 653.

Real estate, rental, and leasing – down 486

Agriculture, forestry, fishing, and hunting – down 101

Arts, entertainment, and recreation – down 87

Utilities – down 6.

ANNUAL PAYROLLS

Last but not least on this set of business pattern lists is the annual payrolls of companies at this point of the economy’s resetting. The plus and minus area comparisons of the pre-recession annual payroll of each sector compared to the most recent collection of data by the Census Bureau.

Health care and social assistance – up $521 million.

Manufacturing – up $140 million.

Accommodation and food services – up $62.1 million.

Transportation and warehousing – up $56.6 million.

Management of companies – up $45.4 million.

Administrative, support, waste management and remediation – up $40.9 million.

Retail trade – up $22.1 million.

Wholesale trade – up $21.9 million.

Finance and insurance – up $20.8 million.

Education services – up $14.9 million.

Real estate, rental, and leasing – up $4.7 million.

Information – up $4.6 million.

Utilities – up $4.6 million.

Arts, entertainment, and recreation – up $2.1 million.

Other services (except public admin) – up $0.5 million.

Agriculture, forestry, fishing, and hunting – down $1.9 million.

Professional, scientific and technical services – down $5.7 million.

Construction – down $26,2 million.

Mining, quarrying, oil and gas extraction – down $34.8 million.

 

 



Categories: CORE DATA, ECONOMY

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