Skip to Main Content

Tennessee and the US May Not Reach Pre-Recession Employment Peaks for Another Ten Years

Thursday, May 30, 2013 | 09:26am

Nashville–According to a new staff report released by the Tennessee Advisory Commission on Intergovernmental Relations, the recession that began in 2007 was one of the worst general economic declines that most Americans have ever experienced.  Starting in the construction sector, the decline spread to the financial sector and eventually rippled throughout the economy, causing significant collateral damage in most other areas.  Employment in Tennessee dropped by 220,000 and in the US by 8.7 million.  Almost six years after the recession began employment has yet to fully recover.  Some job sectors were insulated from the damage—most notably education and health services.  Others, like the state and local government sectors, were able to postpone some of the recession’s effects.  Job growth during the recovery has varied by sector, as well as between Tennessee and the US and by region within Tennessee.  Recent employment forecasts predict that several sectors of both the US and the Tennessee economies may not reach pre-recession peaks for another ten years or more.

A changing employment environment puts some of the job loss in perspective.  Experts now believe that the housing construction and finance bubbles that precipitated the last recession hid underlying structural changes in the labor market that were occurring during the 2000s.  Many pre-recession jobs existed only because of excesses occurring in the construction and finance sectors of the economy.  Had these sectors grown more moderately, structural problems that were developing in the labor market may have been identified earlier.

There were only slight differences in timing between the recession’s effect on US employment and its effect on employment in Tennessee according to the US Bureau of Labor Statistics.  Employment peaked in the US in January 2008 and one month later in Tennessee.  Employment continued to fall nationally through February 2010 before beginning a slow recovery.  The decline in Tennessee’s employment ended much earlier, bottoming out in mid-2009.  Tennessee began a consistent recovery in April 2010, two months later than the national recovery began.  By December 2012, US employment was 2.4% less than it previous peak and Tennessee’s was 2.5% less.  Between December 2012 and February 2013, the nation added 480,000 jobs and the 2.4% difference fell to 2.0%, while Tennessee added nearly 19,000 and its 2.5% difference fell to 1.8%.

Recent estimates from the University of Tennessee’s Center for Business and Economic Research show total employment in both the US and Tennessee regaining or exceeding their previous peaks by 2015.  For some employment sectors in Tennessee, however, the outlook for recovery is dismal.  The retail trade, wholesale trade, financial activities, and information sectors are not expected to return to their peak employment levels until after 2022.  Manufacturing may never return to its peak which occurred in 1979 for the US and in 1978 for Tennessee.

The strength of the recovery varies considerably across the state as well as by sector.  Looking at data for the most recent 12 months, it’s apparent that the sector hit hardest by the recession—mining, logging, and construction—has been recovering, but not in three of the four big regions: Nashville, Knoxville, and Chattanooga.  Memphis is the only one of the four with growth in that sector.  The sector has also declined in Clarksville and Kingsport.  A similar story emerges for the financial sector, which is not looking good in the Memphis, Nashville, Chattanooga, Kingsport-Bristol, and Johnson City areas.

The full report is available on TACIR’s web site at  For more information, contact Stanley Chervin at 615-741-3012 or by email.

The Tennessee Advisory Commission on Intergovernmental Relations (TACIR) serves as a forum for the discussion and resolution of intergovernmental problems; provide high quality research support to state and local government officials in order to improve the overall quality of government in Tennessee; and to improve the effectiveness of the intergovernmental system in order to better serve the citizens of Tennessee.

# # #

Advisory Commission on Intergovernmental Relations | Press Releases