What do we know about Tennessee's post-COVID-19 economy?
Few predictions are clear about the post-pandemic economy other than it will diverge radically from that of a year ago before the virus.
Now that more than 1 million Tennesseans are vaccinated, an end to the rolling restrictions on everything from restaurants to churches, sporting events and some home gatherings is in sight.
New consumer behavior changed the fortunes of entire industries almost overnight and unemployment remains a major concern.
But Tennessee is poised to benefit in big ways as other states contend with tougher hurdles to moving forward.
"You're in a great place right now and you're the envy of most cities in America," said Spencer Levy, senior economic advisor for commercial real-estate and investment firm CBRE. "The velocity of capital is increasing rapidly in Nashville, faster than just about any other city. And you can still get things at a significant discount compared to Austin or Denver."
Pent-up demand to go out to bars, restaurants and entertainment venues will likely bring a boost to the decimated hospitality industry, Levy said.
But unemployment is highest in those sectors, at 15%, and many hotel and restaurant workers will ultimately need to find other opportunities, economists believe.
Meanwhile, accelerated automation in logistics, manufacturing and other industries is reducing the need for human workers and demanding higher skills from those that don't lose their jobs.
"There will never be as many people working in retailing and restaurants after the pandemic than before," said Bill Fox, director of the Boyd Center for Business and Economic Research at the University of Tennessee at Knoxville. "Technology is playing an even bigger role in what we do. Robots don't get sick and they show up for work everyday."
Statewide unemployment levels are expected to keep trending down to 5.2% this year, according to a January report to Gov. Bill Lee from the Boyd Center. Tennesseans' personal income is projected to grow 4.3% a year, reaching $71,221 per household by 2030, on average.
Tech leads the way
The influx of high-skilled tech workers into the Nashville market will drive continued growth and create more local in-demand jobs, according to research.
The region saw a 30% jump in new talent in 2019, one of the nation's highest gains, according to a Middle Tennessee State University study.
"New consumer behavior will affect the technology sector tremendously," said Murat Arik, director of MTSU's Business and Economic Research Center. "So cities need that talent and infrastructure. Services that require close interaction with people will be handled by robots more and more."
The long-standing, thriving health care industry bolsters this growth, particularly as medical technology advances rapidly amid investment during the COVID-19 pandemic.
Low-skilled workers will need to get qualified to oversee greater automation and increasingly technical computer equipment on the factory floor or in the service sector, experts said.
The Nashville region added 7,180 tech jobs from 2014 to 2018, CBRE's Scoring Tech Talent 2020 report found. That trend continues with increasing interest in the market from Amazon and other tech-based business.
"Nashville is the next city up and you really could achieve the levels of Austin and Seattle," Levy said. "But be intentional about it. There are other cities competing against you. Do the highest, most complex work and then you can really compete with New York and San Francisco."
'Be nimble. Be ready'
The multi-billion-dollar investment into expansion and modernization at Nashville International Airport also bodes well for the area's post-pandemic recovery.
A new concourse, additional security wing, more parking garages and improved roadways were added recently. Construction is underway on the first on-airport hotel and officials are working on improving transportation options.
"Putting money into your airport allows everything else to fall into place because it makes it easier to get to town," Levy said. "Those are the kind of things that will drive you forward, in addition to your terrific music scene."
Business leaders are optimistic that the state's rural counties will more quickly adapt modern broadband internet service as the federal government promises large investments into public infrastructure.
The lack of reliable internet connection in rural areas is one of the most challenging issues for the state because businesses won't invest in an area without service.
But every county in the state except Davidson and Moore counties saw higher-than-anticipated sales tax revenue last year. The boom in online shopping directed those dollars to local communities rather than shopping centers like Green Hills and Cool Springs.
"The online purchasing trend has really been accelerated," Fox said. "Will we go back to where we were? A little bit but my guess is we've made a giant step. It's a time saver for many people."
The COVID-19 pandemic pressed more residents in big cities to increasingly look to smaller markets and suburban areas for relief from big crowds, high costs and strict regulations.
The rapid rise in work-from-home opportunities helped spur relocations, and that trend is likely here to stay – though most analysts believe people will return to offices in large numbers.
U-Haul named Tennessee the most popular destination in the country for moves during the pandemic.
Ongoing interest in the Volunteer State kept housing prices rising faster than most parts of the country last year.
"What's really amazing to me is people buying houses in the midst of all this," Fox said. "We are at the largest number of housing starts and sales that we've had since the Great Recession."
For workers, preparing for the future economy means being ready to adapt.
"Be nimble, be ready," Fox said. "Robotics and autonomous vehicles will radically change things. What's really different about modern technology is the adoption rates are so much faster.
"My concern has always been about what happens to the people who aren't able to compete."
Source: Knoxville News Sentinel, by Sandy Mazza Nashville Tennessean
The East Tennessee Economic Development Agency markets and recruits business for the 15 counties in the greater Knoxville-Oak Ridge region of East Tennessee. Visit www.eteda.org
Published February 23, 2021