ETSU Bureau of Business and Economic Research

Tri-Cities Labor Market Report

East Tennessee State University + Fourth Quarter 2007 + College of Business and Technology

THE METROPOLITAN AREA (CSA)

During the fourth quarter the regional labor market continued to set new records in job creation, but unemployment increased for the first time since early 2004. Metropolitan area employment rose by 2.0% to 236,867, a gain of nearly 4,600 jobs compared to the same period in 2006. This marks the eleventh quarter in a row of employment growth, and the eighth quarter where the increase has been around or above two percent.

As expected, the decline in unemployment finally ended during the fourth quarter. The number of unemployed workers increased to 10,883. This is 3.7% higher on a year-to-year basis. The jobless rate for the Tri-Cities metro area during the October to December period was 4.4%, compared to 4.3% a year ago.

Employment trends in the region remained largely unchanged during the fall months. In the fourteen NAICS industry sectors, employment levels were higher in eight, lower in four, and unchanged in two. Job growth was led by large increases in construction, government, and retail trade. Smaller gains were reported by finance, information services, transport & utilities, education & health, and leisure & hospitality. Employment fell in professional & business services, durable manufacturing, nondurable manufacturing, and other services. Job levels were stable in the wholesale trade and mining sectors.

 Labor Force Employment Unemployment
 Period  Level  Y-Y%Ch  Level  Y-Y%Ch  Level  Y-Y%Ch  Rate_
 2001 232,340 0.25 221,186 -0.47 11,155 17.23 4.80
 2002 233,364 0.44 220,150 -0.47 13,214 18.46 5.66
 2003 236,298 1.26 222,567 1.10 13,731 3.91 5.81
 2004 235,100 -0.51 222,090 -0.21 13,010 -5.25 5.53
 2005 236,188 0.46 223,776 0.76 12,412 -4.60 5.26
 2006 240,674 1.90 229,255 2.45 11,418 -8.01 4.74
 2007 245,289 1.92 234,761 2.40 10,528 -7.79 4.74
 05:1 234,000 -0.38 220,050 -0.35 13,951 -0.90 5.96
 05:2 235,461 0.52 222,898 0.56 12,563 -0.16 5.34
 05:3 236,814 0.62 225,040 1.21 11,774 -9.38 4.97
 05:4 238,478 1.09 227,118 1.61 11,360 -8.29 4.76
 06:1 238,018 1.72 225,761 2.60 12,257 -12.14 5.15
  06:2 239,604 1.76 228,008 2.29 11,596 -7.70 4.84
 06:3 242,312 2.32 230,983 2.64 11,329 -3.78 4.68
 06:4 242,762 1.80 232,270 2.27 10,492 -7.65 4.32
 07:1 242,685 1.96 231,096 2.36 11,589 -5.45 4.78
 07:2 244,325 1.97 234,371 2.79 9,954 -14.16 4.07
 07:3 246,398 1.69 236,710 2.48 9,687 -14.49 3.93
 07:4 247,750 2.05 236,867 1.98 10,883 3.73 4.39

THE TRI-CITIES

Strong job growth continued in each of the three urban centers. During the fourth quarter, job levels were up 2.7% in Johnson City, 2.0% in Kingsport, and 1.5% in Bristol. Matching the regional trends, unemployment rose in Bristol and Johnson City for the first time in three years (but continued to decline in Kingsport). The jobless rate was 4.0% in Kingsport, and 4.4% in Johnson City and Bristol.

Bristol TN-VA Urbanized Area Labor Market

 Labor Force Employment  Unemployment
 Period  Level  Y-Y%Ch  Level  Y-Y%Ch  Level  Y-Y%Ch  Rate_
 2001 27,153 0.37 25,981 -0.37 1,172 20.28 4.31
 2002 27,194 0.15 25,775 -0.79 1,419 21.14 5.22
 2003 27,618 1.56 26,001 0.88 1,617 13.92 5.85
 2004 27,081 -1.94 25,534 -1.79 1,547 -4.33 5.71
 2005 27,053 -0.11 25,643 0.43 1,409 -8.89 5.21
 2006 27,583 1.96 26,324 2.66 1,259 -10.68 4.56
 2007 28,047 1.68 26,836 1.94 1,211 -3.81 4.32
 05:1 26,744 –1.53 25,177 -1.04 1,567 -8.81 5.86
 05:2 27,030 -0.12 25,590 0.28 1,440 -6.66 5.33
 05:3 27,027 0.36 25,850 0.90 1,357 -8.93 4.99
 05:4 27,230 0.88 25,957 1.56 1,273 -11.35 4.68
 06:1 27,347 2.26 25,980 3.19 1,367 -12.72 5.00
 06:2 27,485 1.68 26,180 2.31 1,305 -9.39 4.75
 06:3 27,792 2.15 26,562 2.76 1,230 -9.39 4.42
 06:4 27,708 1.76 26,575 2.38 1,133 -11.03 4.09
 07:1 27,841 1.81 26,530 2.12 1,311 -4.13 4.71
 07:2 27,966 1.75 26,788 2.32 1,177 -9.79 4.21
 07:3 28,170 1.36 27,058 1.87 1,112 -9.53 3.95
 07:4 28,210 1.81 26,967 1.47 1,243 9.70 4.40

Johnson City Urbanized Area Labor Market

  Labor Force Employment Unemployment
 Period  Level  Y-Y%Ch  Level  Y-Y%Ch  Level  Y-Y%Ch  Rate_
 2001 51,885 -0.23 49,322 -0.84 2,563 13.36 4.94
 2002 52,147 0.50 49,107 -0.44 3,040 18.59 5.83
 2003 52,996 1.63 50,008 1.83 2,988 -1.70 5.64
 2004 53,858 1.63 50,964 1.91 2,895 -3.13 5.37
 2005 54,325 0.87 51,506 1.06 2,819 -2.60 5.19
 2006 55,205 1.62 52,611 2.15 2,595 -7.97 4.70
 2007 56,615 2.55 54,207 3.03 2,409 -7.17 4.25
 05:1 53,945 0.63 50,775 0.49 3,170 2.93 5.88
 05:2 54,035 1.02 51,170 0.81 2,865 4.91 5.30
 05:3 54,241 0.85 51,611 1.47 2,630 -9.96 4.85
 05:4 55,079 0.96 52,467 1.47 2,612 -8.24 4.74
 06:1 54,451 0.94 51,658 1.74 2,793 -11.89 5.13
 06:2 55,001 1.79 52,320 2.25 2,681 -6.42 4.88
 06:3 55,406 2.15 52,889 2.48 2,517 -4.31 4.54
 06:4 55,964 1.61 53,576 2.11 2,388 -8.59 4.27
 07:1 55,666 2.23 53,056 2.71 2,610  -6.55 4.69
 07:2 56,406 2.55 54,115 3.43 2,291 -14.54 4.06
 07:3 56,866 2.64 54,649 3.33 2,217 -11.92 3.90
 07:4 57,524 2.79 55,008 2.67 2,516 5.38 4.37

Kingsport Urbanized Area Labor Market

 Labor Force Employment Unemployment
 Period  Level  Y-Y%Ch  Level  Y-Y%Ch  Level  Y-Y%Ch  Rate_
 2001 45,468 0.25 43,413 -0.42 2,056 16.99 4.52
 2002 45,401  -0.15 42,967 -1.03 2,435 18.44 5.36
 2003 45,728 0.72 43,043 0.18 2,685 10.29 5.87
 2004 44,896 -1.82 42,340 -1.63 2,556 -4.80 5.69
 2005 44,993 0.21 42,583 0.57 2,410 -5.72 5.36
 2006 45,862 1.93 43,684 2.58 2,179 -9.60 4.75
 2007 46,630 1.67 44,739 2.42 1,891 -13.21 4.05
 05:1 44,468 -0.79 41,749 -0.78 2,719 -0.81 6.11
 05:2 44,968  0.16 42,439 0.19 2,529 -0.31 5.62
 05:3 45,252 0.47 42,922 1.07 2,330 -9.38 5.15
 05:4 45,283 1.01 43,221 1.81 2,062 -13.21 4.55
 06:1 45,277 1.82 42,979 2.95 2,298 -15.50 5.07
 06:2 45,754 1.75 43,498 2.50 2,256 -10.76 4.93
 06:3 46,301 2.32 44,070 2.67 2,230 -4.26 4.82
 06:4 46,116 1.84 44,186 2.23 1,929 -6.44 4.18
 07:1 46,114 1.85 43,981 2.33 2,133 -7.17 4.63
 07:2 46,542 1.72 44,736 2.85 1,806 -19.95 3.88
 07:3 46,943 1.39 45,178 2.51 1,765 -20.89 3.76
 07:4 46,920 1.74 45,061 1.98 1,859 -3.64 3.96

THE UNITED STATES

The national labor market continued to show signs of a maturing and slowing business expansion. During the fall months, employment levels did increase for the 21st quarter in a row, but at a significantly reduced growth rate. Employment was 146.7 million during the fourth quarter, for a gain of only 0.4% above the same period in 2006. With slower job growth, unemployment levels increased for the second quarter in a row. The number of jobless workers jumped by 8.9% to level of 7.0 million. The fourth quarter unemployment rate was 4.6%, compared to 4.2% a year ago. For the first time since the 2001 recession, the national unemployment rate has increased on a year-to-year basis.

The weakening rate of employment growth was reflected among the fourteen NAICS industry sectors. Ten sectors reported higher job levels, led by education & health services, leisure & hospitality, professional & business services, government, and wholesale trade. Smaller employment gains occurred in transport & utilities, retail trade, other services, mining, and information services. Job declines were reported by four sectors: construction, durable manufacturing, nondurable manufacturing, and financial services.

 Labor Force  Employment Unemployment
 Period  Level  Y-Y%Ch  Level  Y-Y%Ch  Level  Y-Y%Ch  Rate_
 2001 143,734 0.81 136,933 0.03 6,801 19.48 4.73
 2002 144,863 0.79 136,485 -0.33 8,378 23.19 5.78
 2003 146,510 1.14 137,736 0.92 8,774 4.73 5.99
 2004 147,401 0.61 139,252 1.10 8,149 -7.12 5.53
 2005 149,320 1.30 141,730 1.78 7,591 -6.86 5.08
 2006 151,428 1.41  144,427 1.90 7,001 -7.77 4.62
 2007 153,124 1.12 146,047 1.12 7,078 1.10 4.62
 04:1 146,249 0.45 137,333 0.70 8,916 -3.34 6.10
 04:2 147,132 0.29 139,050 0.89 8,082 -9.02 5.49
 04:3 148,190 0.82 140,189 1.50 8,001 -9.71 5.40
 04:4 148,034 0.87 140,435 1.31 7,598 -6.51 5.13
 05:1 147,507 0.86 139,180 1.35 8,326 -6.61 5.64
 05:2 149,159  1.38 141,662 1.88 7,497 -7.23 5.03
 05:3 150,476 1.54 143,001 2.01 7,475 -6.57 4.97
 05:4 150,139 1.42 143,075 1.88 7,064 -7.04 4.70
 06:1 149,601 1.42 142,082 2.09 7,518  -9.70 5.03
 06:2 151,154 1.34 144,221 1.81 6,933 -7.52 4.59
 06:3 152,436 1.30 145,332 1.63 7,104 -4.96 4.66
 06:4 152,520 1.59 146,073 2.10 6,446 -8.74 4.23
 07:1 152,013 1.61 144,692 1.84 7,321 -2.63 4.82
 07:2 152,811 1.10 146,040 1.26 6,771 -2.34 4.43
 07:3 153,922 0.97 146,723 0.96 7,199 1.33 4.68
 07:4 153,752 0.81 146,732 0.45 7,020 8.90 4.57
 Note: Data are in thousands.

ANALYSIS

The national economy is showing clear signs of the end of a business expansion, and which will soon impact business conditions in the Tri-Cities region. Are we in a recession? The answer is “not yet”.

Let’s look at the national picture first. After growing at a four percent rate in the second and third quarters, the U.S. economy sputtered to a near standstill in the fourth quarter. Real growth was barely positive, and December was a bad month – the critical holiday retail sales were down and the unemployment rate jumped to 5.0%. In January, retail sales rebounded and the unemployment rate dropped to 4.9%.

The national economy is in a stall, but not yet in a recession. The current set of statistical indicators recall the confusing months before the 1990/91 recession. Will we avoid a recession? Some analysts argue that we will get by with a period of slow growth in 2008, but will avoid an outright business slump. Most analysts are anticipating a recession within the twelve months, even if it has not yet begun.

In the 2008 outlook article (on this website), we noted that the economy is driven by consumer spending and investment spending. The overhang of unsold family homes and the related chaos in the financial markets mean that investment spending is going to be flat for some time. And the continuing decline in housing prices is pulling the rug out from under consumer confidence, which in turn reduces household spending. So a recession is probably in the cards.

But what about the dramatic actions by the Federal Reserve System to lower interest rates, and the quick approval of income tax rebates by the Congress and the White House? The lower interest rates can increase the supply of loanable funds, but few businesses or families are going to borrow and spend in the present economic climate. And numerous polls show that families will use most of their tax rebates to reduce debt loads, not to increase consumer spending.

The lower interest rates and the tax rebates will not prevent a recession, but will make the recession less severe. One point that should not be overlooked is that the U.S. economy does continue to have recessions, but that the recessions have become very mild and short lived. The unemployment rate will only climb to six or seven percent, and the recession will be over in about nine months.

The regional labor market is beginning to reflect some of the trends we see in the national economy, but with significant differences. The construction boom in the region was not in residential construction, but in business construction. And with the large number of projects under way or announced, business construction will remain strong during 2008. The job growth in the region has been centered in several service sectors, and the job gains have been exceptional for two years in a row. So even if there are employment declines in the Tri-Cites area, these declines will be mild and will be on top of a permanent and significant growth in overall employment levels.

Technical Note. This report was prepared in February 2008, and is based upon the 2006 Benchmark of the Current Population Survey, U.S. Department of Labor. The labor markets for Bristol, Johnson City, and Kingsport are presented in terms of the U.S. Census Bureau concept of the "urbanized area" which includes the core city and the contiguous urban fringe. The urbanized area for each city is based upon demographic patterns from the 2000 Census of Population. The data in this report are not adjusted for seasonality, so comparisons should be made on a year-to-year basis.

More information. This report was prepared by Dr. F. Steb Hipple, Professor of Economics, and Research Associate, BBER. For more information, please contact Dr. Hipple c/o Department of Economics, Finance, Geography, and Urban Studies, Box 70686, East Tennessee State University, Johnson City, Tennessee 37614. Phone/Voicemail: 423-439-5304. Fax: 423-439-8583. E-Mail: hipples@etsu.edu . Website: http://faculty.etsu.edu/hipples.