As the United States grapples with rising unemployment, there is one city in the South that is weathering the consequences exceptionally well.
Nashville, known for its countless country music bars, has an unemployment rate of 2.9 percent As of July, a marked difference from the national unemployment rate of 4.3 percent.
The latest data show that only 114,000 jobs were created in July, well below the Dow Jones estimate of 185,000.
Legendary economists see the United States on the brink of recession, but in Nashville and Tennessee as a whole (which has an unemployment rate of 3 percent), that couldn’t be further from the truth.
“The data suggests that Nashville ranks among the best in the state and the country,” said Don Bruce, director of the Boyd Center for Business and Economic Research at the University of Tennessee. The Tennessean“I don’t see any strong statistical argument for anything remotely resembling a recession in Tennessee or Nashville.”
Nashville, Tennessee, is a boomtown. While its unemployment rate of 2.9 percent is one of the best in the country, it is not without its drawbacks.
But there are downsides, too. The economy is so hot in Nashville that some employers are realizing just how tough the job market really is.
Anna Caroline Morrison opened women’s clothing boutique LA Green in downtown Nashville five years ago, just before pandemic lockdowns went into effect.
She was able to keep the business afloat throughout COVID-19, but most days of the week, Morrison has to run the store alone.
“I would love to have some help during the week, but it’s difficult,” she said, explaining that she has been unable to find anyone to work even part-time.
In fact, there are economists who say unemployment may fall too far, and some say… The sweet spot is around 3.8 to 4 percent..
Anna Caroline Morrison, owner of the LA Green clothing boutique in Nashville, is a victim of the city’s extremely tight job market.
For years after the pandemic began, companies struggled to fill open positions. That was especially true in Nashville, where in 2022 there were more than two job openings for every unemployed person.
The excessive fall in unemployment rates is one of the reasons stated by the Federal Reserve for raising interest rates, a policy it has committed to since July 2023 to keep inflation under control.
Most often, the Fed calls this phenomenon “maximum employment.’ In other words, this is the highest level of employment that the economy can sustain without causing excessive inflation.
In fact, the Fed has reduced inflation to 2.9 percent, approaching its 2 percent target.
“It’s a very standard monetary policy response and the idea is to slow the economy without causing a full-blown recession,” Bruce said.
For years after the pandemic began, companies struggled to fill open positions. This was especially true in Nashville, where in 2022 there were more than two job openings for every unemployed person.
“It was certainly beneficial for someone looking for a job and wanting options, but from an overall economic perspective, that’s not a healthy market,” Bishoy Mikhail, vice president of research for the Nashville Area Chamber of Commerce, told The Tennessean.
Currently, there are 1.69 jobs per unemployed person in Nashville. That ratio nationwide is 1.13 to one.
Currently, there are 1.69 jobs for every unemployed person in Nashville. That ratio nationwide is 1.13 to one.
“What we are seeing now is a stabilization. Things are returning to normal,” Mikhail said.
Laurel Graefe, regional executive for the Nashville branch of the Federal Reserve Bank of Atlanta, said she has been talking to local business leaders.
You are told that there has been a marked change in the employment landscape in recent months.
“Across all industries, they’re getting more applicants for job openings, and the applicants they’re sending are more qualified,” Graefe said.
He also explained that there has been an influx of skilled workers to Nashville, which “creates growth.”
“Those same individuals need school services, they need to go to the dentist, to restaurants and all that,” he said.
But this influx cannot last forever, and although it continues, it has slowed recently.
Business leaders tell Graefe that one possible reason for this is the rising cost of housing.
Despite being known primarily for its country music nightlife, economists say Nashville has a diversified economy that will remain strong during any potential recession.
“As more people move here, Nashville becomes a more expensive place to live,” he said.
The national trend is that home prices are rising, and Nashville is no exception. Homes in Music City are selling for 2.5 percent more than they were a year ago. Redfin Data sample.
While this may not seem like much, when the average sales price is $471,575, a small change in either direction can equate to tens of thousands of dollars.
Despite this, local experts say Nashville’s economy will withstand any challenges facing the rest of the country.
The city is home to strong technology, healthcare and manufacturing sectors, which will help it stay strong if a recession hits.
For example, Bridgestone and Nissan North America employ about 47,000 people in Nashville, according to recruiting solutions company Built In.
HCA Healthcare, one of the largest health systems in the U.S., employs more than 54,000 people in the city, which has a population of nearly 700,000.
“I won’t say we are immune to national trends, but we have a very diversified economy that allows us to be a little more resilient,” Mikhail said.