Economists Says Area Might Be In ‘Growth Recession’

A local economist warned Wednesday that the region could be falling into the same economic slowdown common to the rest of the country.

In a report detailing the Tri-Cities labor market, East Tennessee State University economics Professor Steb Hipple said the area may be in the midst of a "growth recession," based on a slight increase in the unemployment rate.

"The national economy is not out of the woods yet," said Hipple, who defined a growth recession as a period when economic output – or growth – slows to the point where the labor market deteriorates. "At a minimum, we will probably see a further deterioration in the national labor market. In the region, labor market conditions will follow those national trends."

According to Hipple’s report, the area lost 439 jobs over the past year, at a time when its eligible labor force remained the same. As a result, the area’s unemployment rate rose from 4.6 in March 2007 to 5.14 percent in March 2008.

Kingsport, Tenn., had the area’s lowest unemployment rate at 4.83 percent for the last quarter, followed by Bristol with 4.86 percent and Johnson City with 5.9 percent.

Each of the rates increased over the past year, with Johnson City experiencing the highest of .79 percentage point.

The national unemployment rate was 5.28 percent over the past quarter, which was up by less than half of a percent from March 2007.

Hipple said most of the region’s job losses took place in six economic sectors, including manufacturing, professional services and wholesale trade. The unemployment numbers for retail and mining remained stable, while the region’s education, health, construction and hospitality sectors saw an increase.

Hipple said the report findings aren’t dismal because the region experienced an exceptionally high amount of economic growth during 2006 and 2007. He said the growth would cushion the region through the country’s economic slowdown.

"We may lose some jobs in the ‘growth recession’," he wrote. "But we will remain at a higher overall level of economic activity."

| (276) 645-2518