"The employment situation across the state has been nothing less than grim," wrote UT economist Matt Murray, who directed the UT Center for Business and Economic Research's 87-page spring update used by state government in budgeting.
"It will take a considerable period of time to erase the job losses that mounted over the course of the recession," Murray said.
The latest UT report says the "state economy should begin seeing improvement as 2010 unfolds. However, a strong and vigorous rebound is not expected. Even if rapid growth does emerge it would be at least two years before economic conditions return to their pre-recession levels."
One bright spot is that taxable sales a key measure of consumer and business spending are starting to recover and could rise 2.1 percent this year, a significant improvement over the 7.6 percent drop in 2009.
However, Murray cautioned that the state's economy isn't likely to fully recover until 2012 or 2013 and that employment might not completely rebound until even later.
Between the first quarter of 2007 and the first quarter of 2010, Tennessee's manufacturing sector shed 88,000 jobs. Manufacturing jobs dropped 14.2 percent in 2009 alone.
The study predicts better hiring days but said non-farm employment is likely to fall slightly in 2010 before growing 1.8 percent in 2011. Manufacturing is expected to continue to slide by
2.5 percent in 2010 before gaining traction in 2011.
Looking ahead, the report notes that the state economy will benefit from investments in the automobile industry, specifically Nissan's plan to build the Leaf in Rutherford County and the Volkswagen manufacturing plant that will begin production soon in Chattanooga.Personal income to rise
Economists say that the Tennessee unemployment rate probably won't drop below 10 percent until 2011 and that, even then, some workers who lost jobs in the recession will find it hard to market their skills.
The April unemployment rate statewide was 10.5 percent.
There was at least one other morsel of good news in the UT study: personal income.
Researchers say people who have jobs can expect to see their income grow by 2.8 percent in 2010 and
4 percent in 2011.
Also, tax collections rose $27.2 million for the first time in two years, from April 2009 to April 2010, with sales and use tax collections increasing 5.6 percent, the report found.
Although Tennessee's economy is improving, the state still faces tough questions on possible tax increases and spending cuts when federal stimulus funds run out next year, the UT study adds.
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