Business Leaders Express Optimism About Tennessee Economy Despite Lingering Worries Over Inflation

March 21, 2023

State business leaders are showing increased optimism for Tennessee’s economy while continuing to be pessimistic about the national economy, according to a recent University of Tennessee, Knoxville, Boyd Center for Business and Economic Research survey.

More than 72 percent of participants in the January Tennessee Business Leaders Survey said they expect the state’s economic conditions to improve over the next year, while only 6 percent expect any kind of decline. As for the national economy, 26 percent of those surveyed expect conditions to improve and 49 percent think conditions will worsen.

Survey regarding how the U.S. and Tennessee economies will perform
Figure 1. Graph. Survey participants’ opinions regarding how the U.S. and Tennessee economies will perform over the next 12 months.

“Our state has done a good job of weathering these past few years and keeping Tennessee open for business,” said Don Bruce, director of the Boyd Center. “People are moving to Tennessee and joining the labor force as well, which gives us a leg up and further instills confidence in Tennessee’s economy.”

Many survey respondents — including almost 60 percent in Middle Tennessee and 45 percent statewide — believe strong business investment is driving good economic conditions. Strong government leadership was the second most popular driver cited among business leaders across the state at almost 27 percent.

The Boyd Center gathered about 50 survey respondents and government officials for a dinner in Nashville in February to discuss the state’s economy, and the sentiments shared in that room mirrored those of the survey. Despite the optimism about the general economy, many were still worried about a shortage of appropriately trained workers.

“When I asked these business leaders about Tennessee’s economy in relation to the U.S., nearly every hand in that room shot up. They all think our state is doing great,” Bruce said. “However, there are still countless employers out there looking for workers to fill positions. The demand is there, but the supply hasn’t kept up. How can we increase the supply of workers and get them ready to meet workforce needs in Tennessee?”

Almost 66 percent of survey respondents said they don’t have an adequate supply of workers trained to work in their industries. Roughly two-thirds of those surveyed said this is because applicants lack a work ethic, and almost half said that initiative was missing. Four in 10 business leaders added that potential employees lack technical skills or are unrealistic about compensation.

“There are still a lot of jobs that need to be filled, even though more Tennesseans are working now than before the pandemic,” Bruce said. “Employers are having trouble hiring from that dwindling pool of available and unemployed people.”

Skills or attributes local applicants are lacking survey
Figure 2. Graph. Skills or attributes survey respondents believe local applicants are lacking. (Respondents were able to select up to three.)

To improve Tennessee’s business climate, respondents said the state needs to focus on enhancing workforce development (60 percent), building better infrastructure (49 percent) and adding better technology infrastructure like high-speed internet (45 percent). Business leaders in Middle Tennessee were more likely to focus on physical and technological infrastructure, while East Tennessee respondents were more interested in workforce development.

Inflation still plays a big role in business decisions as well, with almost half of respondents saying their companies are facing adverse economic conditions. To combat inflation and the worker shortage, 78 percent of respondents offered employees higher wages, 74 percent increased prices for customers and 65 percent looked at new supply chain options to lower costs.

Companies’ financial responses to inflation.
Figure 3. Graph. Companies’ financial responses to inflation.

The January Survey Yielded Additional Illuminating Business Insights

The Boyd Center Tennessee Business Leaders survey found the following additional insights:

  • Forty-seven percent of business leaders said they struggle to attract or retain workers. Business leaders in East Tennessee tend to feel the shortage more (55 percent), while those in middle Tennessee see it as less of an issue (38 percent).
  • Housing was the top issue related to retaining or attracting workers — both the cost (cited by 35 percent) and the availability (cited by 29 percent). East Tennessee respondents were more likely to focus on availability of housing, while those in Middle Tennessee were worried more about the cost of housing.
  • Four in five respondents expect a recession to hit the U.S. economy this year.
  • About 86 percent of business leaders want the Federal Reserve to stop raising interest rates this year.

The full set of survey responses is available online from the Boyd Center.


Erin Hatfield (865-974-6086,