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Local Economic Conditions Rutherford County Home Builders Association Business and Economic Research Center Jennings A. Jones College of Business David A. Penn, Director November 18, 2004 Overview Uncertainty Improved in the spring Uncertainty is now increasing Major Factors
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Local Economic Conditions Rutherford County Home Builders Association Business and Economic Research Center Jennings A. Jones College of Business David A. Penn, Director November 18, 2004
Overview • Uncertainty • Improved in the spring • Uncertainty is now increasing • Major Factors • Muddled consumer and business confidence • Energy prices • Inconsistent employment growth • Rising interest rates
Consumer and Business Confidence Interest rate outlook Iraq war Terrorism Confidence? Earnings outlook Aging of the population Energy prices Job outlook Consumer debt Investment spending
Consumer Confidence Confidence down for the 3rd straight month; 12% lower than in July.
15% price increase could cost Rutherford households $13.6 million this year. Gasoline Prices
Indicators for the Local Economy • Nonfarm employment • Unemployment rate • Taxable sales • Housing and real estate
Indicators for the Local Economy • Nonfarm employment • Unemployment rate • Taxable sales • Housing and real estate
Rutherford County • Payroll employment grew 7.3% March 2003-04 • Second highest employment growth rate among 315 largest counties in the U.S. • Fourth highest December 2002-03 (4.6%) • Sixth highest growth June 2002-03
Nashville MSA Payroll Employment Employment has improved beyond its pre-recession peak. August data
Modest job growth: Nashville MSA up by 1.0%, Tennessee up 0.6% Sept. from year ago. Nonfarmemployment
Payroll Employment Growth Rutherford growth very fast paced.
Indicators for the Local Economy • Nonfarm employment • Unemployment rate • Taxable sales • Housing and real estate
Unemployment rate Unemployment rates September 2004 (2003) U.S. 5.1% (5.8%) Tennessee 3.8% (4.8%) Nashville MSA 3.8% (4.6%) Memphis MSA 6.0% (6.5%) Davidson County 3.9% (4.7%) Rutherford County 3.6% (4.6%) Williamson County 2.8% (3.0%)
Indicators for the Local Economy • Nonfarm employment • Unemployment rate • Taxable sales • Housing and real estate
Rutherford Taxable Sales Slower sales growth this year compared with 2003.
Williamson and other counties are also experiencing slower sales growth. Rutherford & Williamson
Indicators for the Local Economy • Nonfarm employment • Unemployment rate • Taxable sales • Housing and real estate
Residential Building Permits Third Quarter 2003-04 • U.S.: + 7.5% • Tennessee: +16.2% • Nashville MSA: +15.7% • Rutherford County: +17.1%
Rutherford County Housing Units • Added more housing units in 2003 than six states. • Rutherford County ranked in top 100 U.S. counties in housing unit growth for 2003 – Census Bureau
Realty Transfer Tax Collections Activity slowed statewide and in the MSA.
Real Estate Transactions Still very strong in Rutherford County
Realty Transfer TaxSept 2003-04 • Tennessee: -0.3% • Nashville MSA: -13.9% • Rutherford County: +55.9%
Interest Rates Upward pressure on interest rates.
Expectations • Continuing gradual recovery of the U.S. economy. • Gradually rising short-term rates. • Inflation may become more of a concern. • Sustained growth in Europe, Canada, and Mexico would be helpful.
U.S. Markets • Gently rising mortgage rates (up 0.5 in 2005) • Housing starts down 7% in 2005, 8% in 2006 • Mortgage originations down 15% in 2005, 7% in 2006 • Refinancings down 40% in 2005, 23% in 2006 • Source: Mortgage Bankers Assoc.
Expectations for Rutherford County • Choppy taxable sales growth. • Continued strong employment growth. • Slower rate of growth of real estate activity.
Business and Economic Research Center Jennings A. Jones College of Business • Publications • Data • Contract Research • Outreach
Publications • Tennessee’s Business - Professor Horace Johns • Election 2004 (forthcoming) • People Who Keep State Government Running • Tennessee Lottery
Publications • Global Commerce - Professor Steven Livingston • China Takes the Stage • Free Trade Agreements • Trade Wars
Publications • Midstate Economic Indicators • Issued quarterly • Second quarter in print
Business and Economic Research Center David Penn, Director dpenn@mtsu.edu 615-904-8571