Southern city that’s bucking the unemployment trend with booming jobs market

As the US grapples with rising unemployment, one city in the South is weathering the effects exceptionally well.

Nashville, known for its numerous country music bars, has an unemployment rate of 2.9 percent In July, this was a far cry from the national unemployment rate of 4.3 percent.

The latest data shows that only 114,000 jobs were added in July, well below the Dow Jones estimate of 185,000.

Legendary economists see the US teetering on the brink of a recession, but in Nashville and Tennessee as a whole (which an unemployment rate of 3 percent), but that is absolutely not true.

“The data suggests Nashville is 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 evidence statistically for anything resembling a recession in Tennessee or Nashville.”

But it has its drawbacks. The economy is so hot in Nashville that some business owners are realizing how tight the labor market really is.

Anna Caroline Morrison opened the womenswear boutique LA Green in downtown Nashville five years ago, just before pandemic lockdowns went into effect.

She’s been able to keep the business running during the COVID-19 pandemic, but during the week, Morrison mostly has to run the store alone.

“I would like to have some help during the weekdays, but it’s difficult,” she said, explaining that she has yet to find anyone willing to work even part-time.

There are actually economists who say that unemployment could become too low, some even say: the ideal percentage is around 3.8 to 4 percent.

One of the reasons the Federal Reserve is raising interest rates is that unemployment figures are getting too low. The Federal Reserve has been pursuing this policy since July 2023 to keep inflation under control.

The Fed often refers to this phenomenon as ‘maximum employmentIn other words, this is the highest number of jobs the economy can support without leading to excessive inflation.

The Fed has brought inflation down to 2.9 percent, moving closer to its 2 percent target.

“It’s very standard monetary policy and the idea is to slow the economy without causing an outright recession,” Bruce said.

For years after the pandemic began, businesses struggled to fill open positions. That was especially true in Nashville, where there were more than two openings for every unemployed person in 2022.

“It was certainly beneficial for a job seeker who wanted options, but from a broad economic perspective, it’s not a healthy market,” Bishoy Mikhail, vice president of research at the Nashville Chamber of Commerce, told The Tennessean.

There are now 1.69 jobs per unemployed person in Nashville, compared to a national ratio of 1.13 to 1.

“What we are seeing now is a stabilization. Things are returning to normal,” Mikhail said.

Laurel Graefe, regional director at the Federal Reserve Bank of Atlanta’s Nashville branch, said she has been talking to local business owners.

They tell her that there has been a clear change in the job landscape in recent months.

“There are more applicants for vacancies in all sectors and the applicants they send are better qualified,” Graefe said.

She also explained that there is an influx of skilled workers to Nashville, which “generates growth.”

“These same people need school services, need dental services, need restaurants and things like that,” she said.

But this influx cannot last forever. There is still an increase, but lately it has decreased.

Business leaders tell Graefe that rising house prices are a possible reason for this.

“As more people move in, it becomes more expensive to live in Nashville,” she said.

The trend across the country is for home prices to rise, and Nashville is no exception. Homes in Music City are selling for 2.5 percent more than a year ago, Redfin Data shows.

That may not seem like much, but when the average sales price is $471,575, a small change in either direction can add up to tens of thousands of dollars.

Still, local experts say Nashville’s economy is resilient to any challenges facing the rest of the country.

The city has strong technology, healthcare and manufacturing sectors, which will keep the city strong even in a recession.

For example, Bridgestone and Nissan North America employ about 47,000 people in Nashville, according to recruitment firm Built In.

HCA Healthcare, one of the largest health care systems in the U.S., employs more than 54,000 people in the city of nearly 700,000.

“I won’t say we are immune to national trends. But we do have a very diverse economy that makes us somewhat more resilient,” Mikhail said.