Robinson Analytics Nashville 2021 Economic Forecast
I am releasing my economic forecast for Nashville for the new year. My primary look will be through the lens of the financial markets, but will also include a look at the labor markets.
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My forecast will benchmark the Nashville Metro area with the United States overall. In my first chart below, you can see that the financial markets are communicating to me at this time, that the next 6 to 9 months (mid-February 2021 to mid-August 2021 or mid-November 2021) the local economy will be performing significantly better than the nation overall. To the tune of 21 percentage points better as it relates to local business being able to produce profit for their businesses. This has implications for the labor market as well.
Sectors of the Nashville economy that should out perform the nation include:
- A deeper dive here communicates that those business that are operating in the retail space that have a significant share of their business that comes through e-commerce, will do better that those who do not. This is no doubt the still lingering effect of Covid-19 pandemic. Thus certain sub-sectors of consumer cyclical type companies should over perform.
- Another sector of the local economy that will perform well over the coming 6 to 9 months are grocery stores or consumer defensive type firms. They will actually perform the best when you adjust their outlook for risk. Which you will see later in another chart.
- Discount store type firms are also positioned to do will in the coming months.
- Home improvement retail will no doubt benefit as people continue to work from home. This sector should also benefit from the impending stimulus legislation that will put more money in peoples pockets.
- Specialty retailers are positioned to out perform this year as well.
- Those firms that sell computer hardware or technology related firms in the community will also bode well as Nashville continues to recover from the pandemic.
- Specialty industrial machinery firms are going to out perform and are going to be a support to the local market.
When I layer in risk to the forecast, it looks like grocery store retail will most likely perform the best this year. With discount stores and internet focused retailers performing second and third best, respectively.
In a look with risk layered in,
- farm product related companies will most likely perform the worst this year.
- Another sector of the local economy that won’t do that well are telecom services related companies.
- What may seem counter intuitive or surprising, is that medical care facilities companies will also struggle to recover this year from a profit perspective.
The Nashville Business Journal in partnership with First Horizon Bank conducted a survey of the business leaders around the state and in our community. In the graphic below from the survey, 30% of local business have very and extreme confidence in the local economy. This compares with just 22% for the national economy overall. This very much confirms my analysis disparity between the local performance of businesses versus the national performance of businesses across the country.
My non-farm employment model is forecasting that Nashville won’t get back to the labor market level we enjoyed in March of 2020 until September of 2023, as of this writing. See the graphic below.
Take a look at a July 2019 headline from NPR…
$15 Minimum Wage Would Boost 17 Million Workers, Cut 1.3 Million Jobs, CBO Says Raising the federal minimum wage to $15 an hour by 2025 would increase the pay of at least 17 million people, but also put 1.3 million Americans out of work, according to a study by the Congressional Budget Office released on Monday.
Take a look at a recent headline…
The US job market probably won’t recover until 2024 In a report over the weekend, Goldman Sachs (GS) economist Joseph Briggs predicted the unemployment rate will decline to 6.6% by year-end. But “full employment” — an economic term used by the Federal Reserve to signify a healthy job market — won’t be achieved until mid-2024…
Manpower employment outlook for the Nashville Metro community found when they surveyed firms in the local community: “Compared to Q4 2020 when the Net Employment Outlook was 12 percent, Nashville-DavidsonMurfreesboro-Franklin, TN MSA employers have reported a weaker hiring pace,” said Marlene Myers of Manpower. “When looking at year-over-year expectations, hiring intentions have slowed down from when the Outlook was 14 percent.
In summary, Nashville’s economy will out perform the national economy overall during 2021. There will be sectors that do better than others, such as ecommerce focused retailers, grocers, discount and home improvement related stores. Specialty retailers, computer hardware or technology related firms and specialty industrial machine type firms will also be a significant support as the local economy recovers.
Sectors of the economy that will struggle as the year unfolds include farm product related firms, telecom related firms, and those firms providing medical care related facilities and others (See charts)
To access my National Economic Forecast, click Robinson Analytics 2021 Economic Forecast
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