Larry Kessler, Ph.D. Boyd Center for Business & Economic Research University of Tennessee

Larry Kessler, Ph.D. Boyd Center for Business & Economic Research University of Tennessee

The U.S. economy has now enjoyed 7 years of economic growth since the Great Recession Real GDP grew by 1.2% in 2017Q1 2.6% growth in 2017Q2 Nonfarm employment increased by 2.2 million jobs in 2016. Unemployment rate fell to 4.4% in June

Revenue growth has been outstanding Revenue estimates have been very conservative Reserves and balances are in very good shape, though TN could not sustain a significant recession without significant cuts

10.0 8.0 Percentage Change, Previous Quarter SAAR 6.0 4.0 2.0 0.0-2.0-4.0-6.0-8.0-10.0 2000:1 2001:1 2002:1 2003:1 2004:1 2005:1 2006:1 2007:1 2008:1 2009:1 2010:1 2011:1 2012:1 2013:1 2014:1 2015:1 2016:1 2017:1 Source: Bureau of Economic Analysis

6.0 5.0 Percentage change 4.0 3.0 2.0 1.0 0.0-1.0 2017 2.3% 2018 2.7% -2.0-3.0-4.0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: Bureau of Economic Analysis, IHS Global Insights

18,000 6.0 17,000 5.0 Level, billions of chained 2009 $ 16,000 15,000 14,000 13,000 12,000 11,000 10,000 Real GDP 4.0 3.0 2.0 1.0 0.0-1.0-2.0 Percentage change 9,000-3.0 8,000-4.0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Source: Bureau of Economic Analysis, IHS Global Insights

6.0 5.0 Percentage change 4.0 3.0 2.0 1.0 2016 2.7% 0.0-1.0 2009-1.6% -2.0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: Bureau of Economic Analysis

18.0 2000 17.4 2016 17.5 16.0 14.0 12.0 10.0 8.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Millions of units 2009 10.4 Source: IHS Global Insights

4000 3500 2011 3.3B 2016 3.2B Imports (millions of barrels) 3000 2500 2000 1500 2011 2.1B 2016 2.9B 1000 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 U.S. Imports of Crude Oil U.S. Field Production of Crude Oil Source: US Energy Information Administration

$4.50 $4.00 $3.50 Dollars per gallon $3.00 $2.50 $2.00 $1.50 $1.00 July-07 July-08 July-09 July-10 July-11 July-12 July-13 July-14 July-15 July-16 July-17 Source: US Energy Information Administration

14.0 Student 12.0 10.0 Other Mortgage 2008Q3 $9.3T 2017Q1 $8.6T Trillions of dollars 8.0 6.0 2003Q4 $5.7T 4.0 2.0 0.0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: New York Fed

14.0 12.0 Student Other Mortgage 2017Q1 2.8T Trillions of dollars 10.0 8.0 6.0 4.0 2003Q4 2.2T 2.0 0.0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: New York Fed

Trillions of dollars 14.0 12.0 10.0 8.0 6.0 4.0 Student Other Mortgage 2003Q4 $253B 2017Q1 $1.3T 2.0 0.0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: New York Fed

Units of Existing Homes (millions) 8.0 7.0 6.0 5.0 4.0 3.0 2.0 2005 7.1 2005 2.1 2016 5.4 2016 1.2 2.5 2.0 1.5 1.0 0.5 Housing Starts (millions) 1.0 0.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 0.0 Exist. House Sales Housing Starts Source: IHS Global Insights

Percentage change, same month last year 4 2 0-2 -4-6 TN Jun-17 2.0% U.S. Jun-17 1.6% -8 Jun-00 Jun-01 Jun-02 Jun-03 Jun-04 Jun-05 Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Jun-16 Jun-17 TN U.S. Source: Bureau of Labor Statistics

350 179k new jobs per month Employment (thousands) 300 250 200 150 100 50 297 291 176 249 124 164 155 216 232 50 207 152 222 0 Source: Bureau of Labor Statistics

Employment (thousands) 3,100 3,000 2,900 2,800 2,700 2,600 2,500 2,400 Feb-08 2,809.5 Sept-09 2,593.5 Jun-17 3,018.2 2,300 Source: Bureau of Labor Statistics

Mining, Logging, Construction 6.4% Leisure and Hospitality Professional and Business Services Financial Activities Government Trade, Transportation, Utilities Education and Health Services Manufacturing 3.0% 2.5% 2.5% 2.2% 1.6% 1.2% 0.8% Information -0.4% -2% 0% 2% 4% 6% 8% Source: Bureau of Labor Statistics

Trade, Transportation, Utilities 626.5 Government Education and Health Services Professional and Business Services Manufacturing Leisure and Hospitality 433.7 427.3 415.3 346.8 328.6 Financial Activities Mining, Logging, Construction Information 46.3 156.1 126 0 1,000 Employment (in thousands) Source: Bureau of Labor Statistics

12.0 TN Jun-09 11.1% 10.0 Unemployment Rate (%) 8.0 6.0 4.0 2.0 U.S. Oct-09 10.0% U.S. Jun-17 4.4% TN Jun-17 3.6% 0.0 June-05 June-06 June-07 June-08 June-09 June-10 June-11 June-12 June-13 June-14 June-15 June-16 June-17 TN U.S. Source: Bureau of Labor Statistics

Source: Bureau of Labor Statistics

66.0 65.0 64.0 63.0 U.S 62.8% Participation Rate 62.0 61.0 60.0 59.0 58.0 TN 60.2% 57.0 56.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 TN U.S. Source: Bureau of Labor Statistics

Per Capita Personal Income ($) $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 SE Avg. $44,203 TN $44,351 U.S. Avg. $50,337 $0 Source: Bureau of Economic Analysis

25.0 Percentage ever told had health issue by a doctor (%) 20.0 15.0 10.0 5.0 TN U.S. 0.0 Heart attack Coronary heart disease Stroke Diabetes Skin cancer Other types of cancer Kidney disease Depression Source: Center for Disease Control & Prevention, BRFSS

Percentage of population aged 25 years and older 88.0 87.0 86.0 85.0 84.0 83.0 82.0 81.0 80.0 High school graduates or higher TN 86.7 U.S. 85.7 85.5 84.6 82.9 81.8 Percentage of population aged 25 years and older 35.0 30.0 25.0 20.0 15.0 10.0 5.0 Bachelor s degree or higher 29.8 27.5 28.5 24.9 22.4 23.7 79.0 2009 2012 2015 0.0 2009 2012 2015 Source: U.S. Census Bureau

Unemployment Rate (%) Median Weekly Earnings ($) Less than a high school diploma 7.4 Less than a high school diploma $504 High school diploma 5.2 High school diploma $692 Some college, no degree 4.4 Some college, no degree $756 Associate's degree 3.6 Associate's degree $819 Bachelor's degree 2.7 Bachelor's degree $1,156 Master's degree 2.4 Master's degree $1,380 Professional degree 1.6 Professional degree $1,745 Doctoral degree 1.6 Doctoral degree $1,664 0 2 4 6 8 10 $0 $1,000 $2,000 $3,000 Source: U.S. Census Bureau

Effort initiated in 2013 to have 55 percent of working-age Tennesseans hold a higher education credential by 2025. How much in additional earnings would Tennessee see if this goal were met? How much would Tennessee tax revenues grow by?

As of 2015, there s an estimated 1.34 million degree/certificate holders aged 25-64. Representing 38.7% of the working-age population. An estimated 1.98 million degree holders are needed to reach the 55% mark in 2025. 650,000 new degree/certificate holders in the next 10 years.

900,000 800,000 2015 2025 817,471 Degree/Certificate Holders in TN 700,000 600,000 500,000 400,000 300,000 200,000 100,000 357,926 380,401 260,210 138,304 616,128 322,939 428,471 - Certificates Associate's degree Bachelor's degree Graduate or professional degree Source: U.S. Census Bureau

Level of Educational Attainment Median Earnings (in 2015 $) Less than high school graduate $19,035 High school graduate (includes equivalency) $26,365 Some college or associate's degree $32,306 Bachelor's degree $45,225 Graduate or professional degree $57,314 Source: U.S. Census Bureau

Type of Postsecondary Attainment Additional Workers in TN in 2025 Additional Earnings Per Worker Total Additional Earnings Total Additional Fringe Benefits Total Additional Income Associate s/ Certificate 266,446 $5,941 $1.6B $0.356B $1.9B Bachelor's 172,021 $18,860 $3.2B $0.729B $4.0B Graduate or Professional 90,163 $30,949 $2,8B $0.627B $3.4B Total 528,630 $7.6B $1.7B $9.3B

An estimated 528,630 additional certificate or degree holders will work in Tennessee upon achievement of Drive to 55. These workers are projected to earn $9.3 billion annually more in income than that would have been generated without a postsecondary credential. State and local tax revenue in TN would increase by estimated $746.4 million.

Thank You!