Economic Outlook 2004Slide 2Slide 3Midstate TennesseeSlide 5Midstate’s ImportancePer Capita Income 2002Slide 8Slide 9Slide 10Taxable Sales per Capita 2003Slide 12Midstate Growth as Percent of TennesseeRutherford County GrowthPopulation Growth 2002-2003Population Growth 2002-03Payroll Employment Growth Fourth Quarter 2002-03Rutherford County Payroll EmploymentRutherford County Average WageTaxable Sales Second Quarter 2003-04Slide 21Taxable SalesResidential Building Permits Second Quarter 2003-04Building PermitsRutherford County Housing UnitsRealty Transfer TaxRealty Transfer Tax Second Quarter 2003-04Mortgage TaxSlide 29Nonfarm employmentManufacturing employmentSlide 32U.S. and Nashville MSA employment growthExpectationsSlide 35IssuesGrowth of SchoolsSchool Expenditures and RevenuesHow to Pay for New Schools?State Investment Tax CreditsSlide 41Slide 42BERC ActivitiesPublicationsSlide 45Slide 46FutureEconomic Outlook 2004Business and Economic Research CenterJennings A. Jones College of BusinessDavid A. Penn, DirectorMurat Arik, Associate DirectorSeptember 24, 2004Economic Outlook•Current Status•Recent Growth•Expectations•IssuesEconomic Outlook•Current Status•Recent Growth•Expectations•IssuesMidstate TennesseeForty-one counties between the Tennessee River and the Cumberland PlateauMidstate TennesseeForty-one counties between the Tennessee River and the Cumberland PlateauMidstate’s Importance•37% of state’s population•39% of personal income•39% of employment•37% of school enrollment•39% of taxable sales•Per capita income 104% of state averagePer Capita Income 2002Per Capita IncomePer Capital Income by CountyLess than 20,00020,000 - 24,99925,000 - 29,999Greater than 30,000Unemployment Rate Second Qtr. 20043.4%3.4%3.5%4.2%4.6%0.0% 1.0% 2.0% 3.0% 4.0% 5.0%Rutherford CountyDonut CountiesNashville MSAMidstateTenneseseUnemployment Rate by County2.5% - 5.7%5.7% - 8.3%8.3% - 13%Unemployment RateTaxable Sales per Capita Second Qtr. 200414,20014,10017,70014,40013,900- 5,000 10,000 15,000 20,000Rutherford CountyDonut CountiesNashville MSAMidstateTenneseseSales Per CapitaSales per Capita by County2,400 - 6,0006,000 - 13,00013,000 - 18,00018,000 - 32,500Taxable Sales per Capita 2003Economic Outlook•Current Status•Recent Growth•Expectations•IssuesMidstate Growth as Percent of Tennessee•54% of state’s population growth 2002-03•56% of state school enrollment growth 2002-03•50% of state taxable sales growth 2003-04Rutherford County Growth•13% of state’s population growth 2002-03•11% of state school enrollment growth 2002-03•9.7% of state taxable sales growth 2003-04Population Growth 2002-2003•Tennessee: +0.9%•Midstate: +1.3%•Nashville MSA: +1.4%•Donut counties: +2.8%•Rutherford County: +3.4%Population Growth 2002-03Population GrowthPopulation Growth by CountyLess than 0%0% - 0.99%1% - 1.99%2% - 2.99%3% or morePayroll Employment Growth Fourth Quarter 2002-03•Tennessee: +0.2%•Midstate: +1.8%•Nashville MSA: +1.8%•Donut counties: +3.7%•Rutherford County: +4.0%Rutherford County Payroll Employment•Up 4.6% December 2002-03•Fourth highest growth rate among 315 largest counties in the U.S.•Sixth highest growth rate June 2002-03Rutherford County Average Wage•Average weekly wage increased 6.7% Fourth Quarter 2002-03•Thirteenth highest growth rate among 315 largest counties in the U.S.•U.S. large county average: 3.6%•Tennessee average: 4.2%Taxable SalesSecond Quarter 2003-04•Tennessee: + 5.3%•Midstate: + 7.2%•Nashville MSA: + 7.1%•Donut counties: +11.2%•Rutherford County: +10.8%Growth of Taxable Sales 2003-04 Second QuarterPercent Change of Sales Subject to Sales TaxPercent Change in SalesLess than 0%0% - 10%10% - 18.5%Taxable SalesSales slowed in the second quarter following a strong first quarter.-2.0%0.0%2.0%4.0%6.0%8.0%10.0%12.0%Jan-03Apr-03Jul-03Oct-03Jan-04Apr-04Jul-04Tennessee MidstateYear to year percent changeResidential Building Permits Second Quarter 2003-04•Tennessee: +16.3%•Midstate: +21.5%•Nashville MSA: +10.1%•Donut counties: +12.6%•Rutherford County: +20.6%Building PermitsActivity slowing after gangbuster first quarter: Nashville MSA up 10.1%, Midstate up 21.5% from year earlier.Rutherford County Housing Units•Added more housing units in 2003 than six states.•Rutherford County ranked in top 100 U.S. counties in terms of housing unit growth in 2003 – Census Bureau•Implications for public services.Realty Transfer TaxJuly is up by one-third from last year in the Midstate.-20.0%0.0%20.0%40.0%60.0%80.0%Jan-03Apr-03Jul-03Oct-03Jan-04Apr-04Jul-04Tennessee MidstateYear to year percent changeRealty Transfer TaxSecond Quarter 2003-04•Tennessee: +28.6%•Midstate: +33.3%•Nashville MSA: +29.2%•Donut counties: +26.8%•Rutherford County: +11.4%Mortgage Tax.-80.0%-40.0%0.0%40.0%80.0%120.0%160.0%Jan-03Apr-03Jul-03Oct-03Jan-04Apr-04Jul-04Tennessee MidstateYear to year percent changeActivity down in the second quarter following an active first quarter.Focus on the Nashville MSANashville Chamber of CommerceNonfarm Nonfarm employmentemploymentModest job growth: Nashville MSA up by 1.3%, Tennessee up 0.8% from year earlier.-1.0%0.0%1.0%2.0%3.0%Jan-03Apr-03Jul-03Oct-03Jan-04Apr-04Jul-04Tennessee Nashville MSAYear to year percent changeManufacturing employmentSome plants are hiring: Nashville MSA up by 2.8%, Tennessee up 0.6% from year earlier.-6.0%-4.0%-2.0%0.0%2.0%4.0%Jan-03Apr-03Jul-03Oct-03Jan-04Apr-04Jul-04Tennessee Nashville MSAYear to year percent changeEconomic Outlook•Current Status•Recent Growth•Expectations•IssuesU.S. and Nashville MSA employment growth-4.0%-2.0%0.0%2.0%4.0%6.0%8.0%10.0%1980 1985 1990 1995 2000 2004Nashville MSA U.S.Year to year percent changeExpectations•Signs that local economic activity is strengthening in the third quarter•Midstate Leading Index flat in second quarter, but up in June and JulyEconomic Outlook•Current Status•Recent Growth•Expectations•IssuesIssues•Rising demand for local government services, particularly schools•Court fight over industrial tax creditsGrowth of SchoolsStudent population increase 2002-2003:•+14,674 in Tennessee (+1.5%)•+3,970 in the Donut counties (+3.9%)•+1,450 in Rutherford County (+5.2%)Measured by net enrollment•+8,298 in the Midstate counties (+2.4%)•Spending per ADA rising 4.6% annually in donut counties 2000-03•Operating expenditures rising 7.3% annually for the donut