The Tri-Cities labor market is slogging through the seasonal slump by slowing adding nonfarm jobs.
So far this year, employers are averaging 40 new jobs a month. Last year they grew at an average rate of 134 a month. July’s non-adjusted, preliminary total is up 2,100 from last year. The gains in the Kingsport-Bristol MSA came in construction; manufacturing; trade; transportation and utilities; and leisure and hospitality. The Johnson City MSA saw gains in the information sector; financial activities; and professional and business services. Other sectors lost jobs or were flat in both metro areas. Johnson City’s labor market has also reversed the job loss trend from the first half of the year.
July’s employment was up 1.5% in the seven-county region, but an increase in the labor force kept the unemployment rate at last month’s 4.3%. It was the 17th straight month the region’s jobless rate has been under 5%.
Here’s where the data and the feel of the local economy come into conflict.
By the numbers, the Tri-Cities is at full employment. Economists define full employment as any time a country has a jobless rate equal to or below the non-accelerating inflation rate of unemployment (NAIRU). Estimates of this measure are based on the historical relationship between the unemployment rate and changes in the pace of inflation. If the jobless rate is below the NAIRU, the economy is at full employment. Currently, the NAIRU is 4.6%. That calculation is made on the national level, so you have to use it with the local employment rate for a full-employment picture. Since the local jobless rate is 4.3%, the Tri-Cities is technically at full employment.
But even at full employment – and reports that there are actually more jobs than interested workers – local agencies that provide food relief say demand keeps increasing. It has become a comment lament locally and nation wide that goes like this, Many people are getting by, but not getting ahead. There’s also an uptick in complaints about homeless people in the upper end of the downtown area, and pan handlers are common in some areas.
The consumer credit growth rate has been trending lower and since it’s the lubricant that keeps the economy humming that’s a concern. Consumer credit does not include mortgages.
Retail sales tax collections are up, but the Johnson City metro area is struggling to maintain its market share from last year. So far this year, collections in the Kingsport-Bristol metro area have met or exceeded its 2017 annual market share.
Economists are also concerned about subprime auto bonds, where loans to people with patchy credit histories are packaged into securities then sold to big investors. Bloomberg reported earlier this year the collateral behind the bonds is getting dicey as owners are increasingly falling behind on their loans.
But on the positive side of the picture:
Local existing home sales just posted their 7th straight monthly year-to-year record. New pending sales are at a high for the year, and the average sales price is 3.7% better than it was during the first seven months of last year. That’s important because the existing housing market and consumer spending continue driving the local economy’s recovery. The home sales growth rate is slowing, but the market is on track for another record year.
Things are not as rosy in the new home construction area. At mid-year, new residential permits were down almost 10% from the first half of last year. Greene and Sullivan county markets were exceptions to the downturn.
Even though the nonfarm jobs growth rate is less than last year, there were 200 more nonfarm jobs than they were in July 2008. The downside is the economy is creating more sub-par jobs. Nationwide four of every 10 workers say they’re underpaid. There are also complains in Kingsport about a slow high-end, and professional jobs erosion in the medical sector as the Ballad merger moves forward.
The region’s year-to-year month labor force increased for six straight months in July, but like employment a comparison to the pre-recession high is sobering. There were 17,376 fewer people in the labor force in July than the April 2009 high point.
Private sector wages are increasing in the Johnson City metro area, but not in Kingsport-Bristol.
Some of the region’s labor force woes can be written off to an aging labor force, and that’s not getting any better. Workers aging out of current full-time jobs will increase for the next decade. At the same time, the share of older workers still on the job is increasing as many take up part-time or contract work.
Another positive note is the region saw some population growth, according to Census estimates. The number of new residents will take on definition next month when those estimates are refined.
There’s no argument that the economy is growing, but that slowing growth is riddled with sustainability questions.