As the US deals with rising unemployment, there’s one city in the south that’s weathering the fallout exceptionally well.
Nashville, known for its countless country music bars, has a 2.9 percent unemployment rate as of July, a stark difference from the national 4.3 percent jobless rate.
The most recent data shows only 114,000 jobs were added in July, which was far below the Dow Jones estimate of 185,000.
Legendary economists see the US teetering on the brink of recession, but in Nashville and Tennessee as a whole (which has a jobless rate of 3 percent), that couldn’t be further from the truth.
‘The data would suggest Nashville is doing among the best in the state and the best in the country,’ Don Bruce, director of the Boyd Center for Business and Economic Research at the University of Tennessee, told The Tennessean. ‘I don’t see a strong statistical case for anything remotely resembling a recession in Tennessee or Nashville.’
Nashville, Tennessee, is something of a boomtown. Even though its 2.9 percent unemployment rate is one of the best in the country, it doesn’t come without its drawbacks
But it does have its downsides. The economy is so hot in Nashville that some business owners are realizing how tight the job market really is.
Anna Caroline Morrison opened the L.A. Green women’s clothing boutique in downtown Nashville five years ago, just before the pandemic lockdowns went into effect.
She was able to keep the business afloat all throughout COVID-19, but on most weekdays, Morrison has to run the store by herself.
‘I would love to have some weekday help, but it’s hard,’ she said, explaining that she hasn’t been able to find someone to work even on a part-time basis.
There are actually economists out there who say unemployment can fall too low, with some saying the sweet spot is around 3.8 to 4 percent.
Anna Caroline Morrison, who owns the L.A. Green clothing boutique in Nashville, is one victim of the extremely tight job market in the city
For years after the pandemic began, businesses struggled to fill open positions. That was especially true in Nashville, where in 2022 there were were more than two job openings for every person that was unemployed
Unemployment rates getting too low is one of the Federal Reserve’s stated rationales for raising interest rates, a policy it has committed to since July 2023 to keep inflation under control.
More often, the Fed calls this phenomenon ‘maximum employment.’ In other words, this is the highest level of jobs the economy can sustain without leading to excessive inflation.
The Fed has in fact reduced inflation to 2.9 percent, nearing closer to its target 2 percent.
‘It’s a very standard monetary policy response and the whole idea is to slow the economy down without tipping off an outright recession,’ Bruce said.
For years after the pandemic began, businesses struggled to fill open positions. That was especially true in Nashville, where in 2022 there were were more than two job openings for every person that was unemployed.
‘It was certainly beneficial for a job seeker who wanted options, but from a big picture economic perspective, that’s not a healthy market,’ Bishoy Mikhail, vice president for research at the Nashville Area Chamber of Commerce, told The Tennessean.
Now there’s 1.69 jobs per unemployed person in Nashville. That ratio nationwide is 1.13 to one
Now there’s 1.69 jobs per unemployed person in Nashville. That ratio nationwide is 1.13 to one.
‘What we’re seeing now is a stabilization. Things are getting back to normal,’ Mikhail said.
Laurel Graefe, regional executive at the Nashville branch of the Federal Reserve Bank of Atlanta, said she’s been talking to local business leaders.
They’re telling her there’s been a marked change in the job landscape over the last few months.
‘Across industries, they’re getting more applicants for job openings, and the applicants they’re sending are more qualified,’ Graefe said.
She also explained that there’s been an influx of skilled workers to Nashville, which ‘begets growth.’
‘Those same individuals need school services, need to go to dentists, and restaurants, and all of that,’ she said.
But this influx can’t last forever, and while it continues, it has slowed recently.
Business leaders tell Graefe that a possible reason for this is the rising cost of housing.
Despite being known mostly for its country music nightlife, economists say Nashville has a diversified economy that will remain strong throughout any possible recession
‘As we have more people moving in, Nashville becomes a more expensive place to live,’ she said.
The trend nationwide is that home prices are up, and Nashville is no exception. Houses in Music City are selling for 2.5 percent more than they were a year ago, Redfin data shows.
While that may not seem like much, when the median sale price is $471,575, a tiny change in either direction can equate to tens of thousands of dollars.
Despite this, local experts say that Nashville’s economy will weather whatever challenges the rest of the country faces.
The city is home to strong tech, healthcare and manufacturing sectors, which will help it stay strong if a recession comes to pass.
For example, Bridgestone and Nissan North America employs some 47,000 people in Nashville, according to recruitment solutions company Built In.
HCA Healthcare, one of the largest health systems in the US, employs over 54,000 in the city, which has a population nearing 700,000.
‘I won’t say we’re immune to national trends. But we do have a really diverse economy that lets us be a bit more resilient,’ Mikhail said.
