Tennessee has second fastest economic growth of states in 2022
Tennessee had the second fastest economic growth in 2022, being outpaced by Idaho according to estimates by the U.S. Bureau of Economic Analysis.
Idaho had a 5.7% economic growth rate followed by Tennessee’s 4.5%. Following Idaho and Tennessee were Texas (4%), Florida (3.5%), Oregon (3.3%), Colorado (3.2%), North Carolina (3.2%), New York (2.8%), New Jersey (3.8%), and Utah (2.75).
CivMetrics, who compiled the data based on U.S. Bureau of Economic Analysis, found that all of the top states for growth also saw a growth of population, especially among younger people with college degrees, combined with a strong job market.
Tennessee’s economy grew to a record $368.6 million in output, nearly two-and-a-half times above the national average. Additionally, Tennessee’s population outpaced the national average.
"There's been a slower rate of growth across all states, but Tennessee remains a very bright spot among all states," Don Bruce, director of the Boyd Center for Business and Economic Research at the University of Tennessee in Knoxville, said. "During and beyond the pandemic, a lot of folks have moved here, and many businesses have also decided to relocate here as well."
While Tennessee landed its biggest investment ever in late 2021 when Ford Motor Co. and SK Innovation announced plans to invest $5.6 billion for an electric vehicle and battery production complex near Stanton in West Tennessee. LG Chem also announced plans for a $3.2 billion battery plant in Clarksville 14 months later after LG Chem and GM announced plans for the joint, $2.3 billion Ultium Cells battery plant in Spring Hill. Together, these three facilities will create 7,660 jobs.
Bruce said Tennessee continues to benefit from its location within a day's drive of 60% of the U.S. population and its favorable energy prices, state and local taxes, and costs of doing business.
"With more remote workers able to live anywhere, we're seeing an increase in migration to Tennessee from other higher-cost-of-living states," Bruce said.
In its annual economic forecast, UT's Boyd Center predicted Tennessee will avoid a recession this year and grow another 0.7% for all of 2023. Nationwide, the U.S. economy is projected to decline by 0.2% for all of 2023.
The U.S. gross domestic product, adjusted for inflation, grew at annual rate of 2.9% in the fourth quarter of 2022, according to the U.S. Department of Commerce. Consumer spending grew at a 2.1% rate. The fourth-quarter growth ended a year where economic output contracted in the first half of the year, prompting talks of a recession, only to rebound in the second half.
Over the whole year, U.S. GDP grew 1%, down from 5.7% in 2021. Economists believe this low growth was driven by recovery from the pandemic, the war in Europe, inflation, aggressive interest-rate increases by the Federal Reserve, and big swings in trade and inventories.