Like a drop on a rollercoaster ride that leaves the riders’ stomachs in their throats, the U.S. economy fell hard and fast in 2008 and 2009.
Nissan plans to retool and expand its Smyrna plant to produce the Leaf, a zero-emissions vehicle.
But the rollercoaster appears to be climbing out of the recession with a slow, steady ascent, and local business is excited about the prospect of a new year.
“I’m optimistic. I think we are at the beginning of a slower climb back to a better economy,” Rutherford County Chamber of Commerce President Paul Latture said.
While local business may feel optimistic about the future, local economists aren’t sure things are going to be so sunny.
“Just about the only thing that is certain about the economy this year is the high level of uncertainty,” said David Penn, director of MTSU’s Business and Economic Research Center. “Nationally we have experienced recent gains in manufacturing, but the ability of the sector to sustain these gains in the face of weak consumer demand is questionable.”
Not only has the national economy seen gains in manufacturing, the third and fourth quarters saw gross domestic product growth for the first time in four straight quarters.
Some more good news came in the form of retail sales in Rutherford County, which saw only a 0.91 percent drop in sales tax revenue from 2008 in October and 3 percent drop in November, compared to a 9.66 percent drop in September when compared to the previous year.
In the third and fourth quarters of 2009, the county retail sales dropped 5.58 percent while statewide sales fell 6.65 percent compared to last year, Rutherford County Finance Director Lisa Nolen said.
The better than expected sales tax revenue in October was fueled by growth in Murfreesboro, which saw a 3.21 percent bump in revenue, and Eagleville, which grew a whopping 9.85 percent.
“Indicators for the third quarter (showed) continued improvement and a movement into the black for many measures of economic activity,” said Matthew Murray, associate director of UT-Knoxville’s Center for Business and Economic Research.
Like Penn, Murray sees slow growth, but growth nonetheless, in 2010.
But statewide the prospects may be a mixed bag.
“The state and national economies have dug enormous holes, and it will be years before the levels of economic activity return to their pre-recession levels,” Murray said, adding the national economy may not return to pre-recession levels until 2011.
Fueled by a weak labor market, the state will see slow growth compared to the nation as a whole, he said.
Murray expects more job losses in most sectors, but at a slower pace than the past few years.
In the Nashville-Murfreesboro Metropolitan Statistical Area, the construction and manufacturing sectors have been the hardest hit with job losses of 13 percent and 10 percent respectively from 2008 to 2009. The only two sectors that haven’t see drops in employment were health care and education, which grew slightly, and government services, which was flat.
Overall the picture is improving slightly with the unemployment rate in Rutherford County holding steady near 10 percent toward the end of 2009.
Average number of hours worked is on the rise in the Nashville MSA, which typically is a precursor for hiring. But Penn doesn’t expect employers to start adding jobs again any time soon.
“Given the number of persons who lost jobs in the previous two years plus more workers entering the labor force due to graduations and population growth, the unemployment rate is likely to remain elevated for at least the next two years,” he said.
Fueled by a sluggish job market, Penn sees slow growth on the state level for 2010.
“The most likely path for this year is slow growth, but a higher growth spurt cannot be ruled out,” Penn said.
On the county level, Latture said manufacturing is on an upswing, as is construction, thanks to Nissan North America’s Smyrna facility and upcoming expansion.
The automaker plans to retool and expand its factory by 1.3 million square feet for the production of zero-emission electric vehicles and in turn create around 1,700 jobs.
Latture said Nissan’s expansion will cause a “ripple effect” with increased activity from suppliers.
Nissan projects the plant expansion would indirectly produce 10,708 jobs in addition to the payroll jobs. He said the anticipated wages would be approximately $525 million and generate $11.3 million in new local taxes.
Construction on the expansion will start this year, boosting employment, and the plant expansion is set to open in 2012.
The up-coming completion of the new Middle Tennessee Medical Center will also give a boost to local employment in the health care sector.
The hospital plans the addition of more than 100 health care-related jobs plus an undisclosed number of support positions, MTMC Public Relations Director Angie Boyd-Chambers said.
On the homes front, local real estate broker Bob Lamb, of Exit Realty Bob Lamb and Associates, is heartened by the improvement the economy saw in the last two quarters of 2009.
“It’s gonna be great,” he said. “We really are very encouraged at how 2009 ended. I feel 2010 will be great for the real estate business.”
Much like the rest of the nation, Rutherford County saw a dramatic drop in construction because of the collapse in the housing market.
Construction activity has begun to rebound with 299 building permits issued in November 2009 in the Nashville MSA, which is an increase over the 215 issued in November 2008.
Candy Joyce from the Middle Tennessee Association of Realtors said the home construction market will continue to be weak in 2010 as the market absorbs excess inventory.
And the good news from slow construction is a stabilization of home prices.
The weak market pushed 2009 home prices down to 2005 levels. The average sale price of a Rutherford County home in 2009 was nearly $165,000, down from a high of almost $185,000 in 2007.
“As we continue to absorb the extra inventory of properties that we had in early 2009, and with a soft new construction market, the prices of homes are stable and should begin to rise slightly again this year,” she said.
In addition to the dwindling inventory, the homebuyer tax credits offered by the federal government will continue to lubricate the market into the middle of 2010, Lamb said.
The affects of the first-time homebuyer credit can be seen in home sales in the last quarter of 2009.
November and December saw 324 and 238 closings respectively, compared to 207 and 226 closings in 2008.
“The expansion of the tax credit to motivate existing home owners to buy again or buy up will be a huge boost for the traditionally slow cold winter months and early spring,” Joyce said.
Joyce said commercial business rentals and residential rentals should continue to be strong in the face of a restrictive credit market and low interest rates.
“As banks stabilize their loan portfolios and rates continue to hold in the 5 percent range, real estate should continue a steady growth of recovery,” she said.
The improving housing market, when combined with improvement in other sectors, spells out a better year in 2010.
Michelle Willard can be contacted at 615-869-0816 or email@example.com.