Unemployment in Tennessee fell to an all-time low in July as the Volunteer State continued to add new businesses and jobs despite fears of an economic slowdown from higher interest rates.
The Tennessee Department of Labor and Workforce Development said Thursday the jobless rate across Tennessee in July dropped another tenth of a percentage point to 3.1% — the lowest rate since the federal government began tracking the statistic in 1976. Over the past year, Tennessee employers have added 72,400 jobs to boost employment in the state this summer to a record high.
"Tennessee, very proudly, continues to lead the United States in the continued high levels of new business registrations and overall job growth," Don Bruce, director of the Boyd Center for Business and Economic Research at the University of Tennessee, said in a conference call Thursday to discuss the status of Tennessee's economy. "The Tennessee labor market remains very strong."
For the first time since before the pandemic in early 2020, Tennessee's unemployment rate dipped below neighboring Georgia in July. Georgia's jobless rate in July remained at 3.2%, according to figures released Thursday by the Georgia Department of Labor.
Both Tennessee and Georgia reported unemployment rates in July below the seasonally adjusted U.S. average of 3.5% amid one of the tightest labor markets in modern history. Tennessee Career Centers on Thursday listed 234,713 open jobs across the state, or more than twice the 107,202 Tennesseans counted as unemployed in July.
The Chattanooga Area Chamber of Commerce's online employment service, ChattanoogaCalling.com, lists 2,366 open jobs in the Chattanooga area.
Despite the strong economy, the labor force participation rate in Tennessee remains below the pre-pandemic peak, and Bruce said many employers continue to struggle with what he called "a pretty significant labor shortage," Bruce said.
In Georgia, the labor market remains tight even as the Federal Reserve Board has raised interest rates to try to cool the economy and dampen economic demand to control inflation, state Labor Commissioner Bruce Thompson said.
"Georgia's economic resilience hinges on a delicate balance between job creation and industry growth," Bruce said in a report on Georgia's jobless numbers Thursday. "While we are thrilled to have an unemployment rate lower than the national average and a record number of workers to fill essential roles, we are maintaining a watchful eye on unemployment trends to ensure a sustainable path forward."
Over the past 12 months, Georgia employers added a net 88,300 jobs to boost the state's employment total above 4.9 million for the first time.
The job gains are not just coming from existing businesses. Tennessee Secretary of State Tre Hargett reported Thursday that business filings across the state continued to grow this year and reached a record high in the second quarter of the year.
There were 19,996 new business filings in Tennessee during the second quarter of 2023, representing the highest number of new filings since such records have been kept for the past 25 years.
"This 1.4% year over year increase in business filings shows that businesses continue to establish in Tennessee at high rates, which traditionally tends to lead to a high level of more jobs, personal income and state revenues," Hargett said.
Despite the statewide gain, however, new business filings in the past year dropped by 1.4% in Hamilton County, according to the state's quarterly business and economic report.
Bruce said he is increasingly optimistic about Tennessee's chances of avoiding an economic downturn from the Fed's tightening monetary policy, putting the chances of a U.S. recession anytime soon as only 1 in 4.
"The U.S. economy continues to stabilize, and the national recession risk continues to fall with each passing month," Bruce said.
Tennessee's lower cost of living and attractive lifestyle is drawing more businesses and workers to the state, boosting Tennessee's economy at a faster pace than most of the nation, Hargett said.
"People want to be here in Tennessee to enjoy our lifestyle and be able to be in a place where their dollar goes farther," Hargett said, noting that the average cost of living in Tennessee is about 10% lower than the U.S. as a whole.