Economic Conditions Outlook

April 2025

Welcome to the April 2025 issue of ECO, financed by First Horizon Bank, the Knoxville Chamber’s monthly economic outlook analysis.

New this month! Answer a quick question before reading the report:

Each month, we provide a varied list of economic indicators with subsequent insight into how the data and information may impact the region. A major component of this work is our quarterly survey of businesses in the manufacturing, retail, and service sectors, which we leverage to gauge current economic conditions and gain insights into the economic outlook for the next six months. We also include traditional labor market, housing, sales tax, and airport information, as well as impromptu information as it becomes available.

We hope that ECO – financed by First Horizon Bank, will help our regional business community make more informed decisions as they run their businesses.

Survey Note: Beginning January 2024 and going forward, the Economic Conditions Outlook (ECO) Survey is being conducted on a quarterly basis instead of monthly.

See Previous Issues

Jump to Analysis:

Tariff Effects on Local Business	Labor Market
Airport Freight and Passenger Trends	National Employment Report
Consumer Price Index/Inflation Rates	National Retail Sales
Housing Market	Recent Expansion Announcements
Job Market	State and Local Sales Tax
Knox County Business Licenses	Intuit Quickbooks SBI
Annual Population Growth Rates	Worker Shortage Update

Economic Survey Results by Industry

Based on the response to the Quarter 2 (April 2025) survey, the evaluation of the level of general business activity and company outlooks have “improved” from the previous quarter. (In the last quarter, the evaluation of the level of general business activity and company outlooks had mostly “improved.”)

The Quarter 2 current indicator responses show “increases” in production, the volume of new orders, the volume of shipments, finished goods inventories, wages and benefits, the number of employees, and capital expenditures. “No changes” are reported in capacity utilization, growth rate of orders, unfilled orders, delivery time, prices paid for raw materials, prices received for finished goods, and average employee workweek. (In the last quarter, responses showed mostly “increases” in the growth rate of orders, prices paid for raw materials, and wages and benefits. “No changes” were mostly reported in unfilled orders, delivery time, finished goods inventories, prices received for finished goods, and average employee workweek. Production, volume of new orders, volume of shipments, and capital expenditures were mostly split between “increased” and “decreased.” The number of employees was mostly split between “increased” and “no change.” Capacity utilization was mostly split between “decreased” and “no change.”)

The six-month outlook in Quarter 2 anticipates “increases” in production, capacity utilization, volume of new orders, growth rate of orders, volume of shipments, finished goods inventories, number of employees, and capital expenditures. “No changes” are expected in unfilled orders, delivery time, prices paid for raw materials, prices received for finished goods, wages and benefits, and average employee workweek. (The six-month outlook in the last quarter expected mostly “increases” in production, capacity utilization, volume of new orders, growth rate of orders, volume of shipments, delivery time, prices paid for raw materials, prices received for finished goods, wages and benefits, number of employees, and capital expenditures. “No changes” were expected for unfilled orders, finished goods inventories, and the average employee workweek.)

Knoxville area retailers indicated in the Quarter 2 (April 2025) survey that the evaluation of the level of general business activity has “worsened” from the last quarter and company outlooks have stayed “the same.” (In the last quarter, retailers responded that their evaluation of the level of general business activity was mostly “the same” from the last quarter, while their company outlooks had mostly “improved.”)

The Quarter 2 current indicator responses show “increases” in net sales revenue, input prices, selling prices, capital expenditures, and inventories. The numbers of both full-time and part-time employees have “decreased.” “No changes” are reported for internet sales, average employee workweek, and wages and benefits. (In the last quarter, retail responses showed mostly “increases” in net sales revenue, wages and benefits, input prices, and selling prices. “No changes” were mostly reported in internet sales, the number of full-time and part-time employees, and the average employee workweek. Capital expenditures and inventories were evenly split between “increase” and “no change.”)

The six-month retail outlook in Quarter 2 projects “increases” in net sales revenue, input prices, selling prices, and capital expenditures. “No changes” are expected in internet sales, the numbers of full-time and part-time employees, average employee workweek, and wages and benefits. Inventories are expected to “decrease.” (The six-month outlook in the last quarter anticipated mostly “increases” in net sales revenue, wages and benefits, input prices, selling prices, and capital expenditures. “No changes” were mostly forecasted for internet sales, the number of part-time employees, and the average employee workweek. The number of full-time employees and inventories were evenly split between “increase” and “no change.”)

Knoxville area service sector businesses report in the Quarter 2 (April 2025) survey that their evaluation of the level of general business activity is mostly split between “worsened” and “the same” from the last quarter, while company outlooks are “mixed.” (The evaluation of the level of general business activity had mostly “improved” from the last quarter, while company outlooks continued to be “mixed” in the last quarter.)

The Quarter 2 current indicator responses show mostly “no changes” in revenue, the number of full-time and part-time employees, average employee workweek, wages and benefits, and selling prices. Input prices are split evenly between “increase” and “no change.” Capital expenditures are “mixed.” (In the last quarter, responses showed mostly “increases” in revenue, wages and benefits, input prices, and capital expenditures. “No changes” were mostly reported for the number of part-time employees, the average employee workweek, and selling prices. The number of full-time employees was “mixed.”)

The six-month outlook in Quarter 2 projects mostly “no changes” in selling prices, the number of part-time employees, and average employee workweek. “Increases” are mostly expected in wages and benefits, input prices, and capital expenditures. Revenue is evenly split between “increase” and “decrease.” The number of full-time employees is “mixed.” (The six-month outlook in the last quarter anticipated mostly “increases” in revenue, the number of full-time employees, wages and benefits, input prices, selling prices, and capital expenditures. Mostly “no changes” were expected in the number of part-time employees and the average employee workweek.)

Service sector comments indicate that many service employees are working multiple jobs and asking for more pay due to inflation.

Note: We are still growing the number of participating companies, so response totals in some areas may be fairly small. If you are interested in being a participant in our quarterly surveys, please register HERE.

Tariff Effects on Local Businesses

In addition to the usual quarterly survey questions, we asked participants if the tariffs are affecting their businesses and if so, in what ways. Three-quarters of respondents indicated that the tariffs are affecting their businesses. Negative impacts included the loss of federal grants, vendors implementing 10%+ surcharges, many import products already seeing increases in prices, uncertainty over what the actual tariffs are, and uncertainty over products that are mostly made in the U.S. but have a few parts or pieces made outside of the U.S. On the positive side, some see improving opportunities to work with companies trying to localize their products.

Labor Market Information

The Knoxville MSA’s unemployment rate in March was 2.9% (down from 3.0% in February and up from 2.5% in March 2024.) Knox County’s unemployment rate in March was 2.7% (down from 2.8% in February and up from 2.5% in March 2024.) Tennessee’s unemployment rate was 3.3% in March (down from 3.5% in February and up from 3.0% in last March.) The U.S. unemployment rate was 4.2% in March (down from 4.5% in February and up from 3.9% in last March.)

The size of the total labor force slightly increased from February to March at the local, state, and national levels. Knox County’s labor force increased 0.9% from 256,280 in February to 258,642 in March. The Knoxville MSA’s labor force increased 0.8% from 456,337 in February to 460,114 in March. Tennessee’s labor force increased 0.8% from 3,437,068 in February to 3,464,857 in March. The national labor force increased 0.3% from 170,116,000 in February to 170,653,000 in March.

Below is the 13-month unemployment rates trending comparison for the four largest MSA’s in Tennessee –

(Source: U.S. Bureau of Labor Statistics; Tennessee Dept. of Labor & Workforce Development)

Job Market

For the month of March, there were 9,376 unique active job postings in the Knoxville MSA (down 4.9% from February and up 2.8% from last March.) There were 5,933 unique active job postings in Knox County (down 8.1% from February and down 1.6% from this time last year.)

The Top 10 industries (by number of job postings) in the Knoxville MSA in March were –

The Top 10 occupations (by number of job postings) in the Knoxville MSA in March were –

You can view the 13-month job postings trend for Knox County and the Knoxville MSA below.

(Source: Lightcast – formerly Emsi Burning Glass)

ADP National Employment Report®

Each month, ADP, a large-scale payroll and human resources company, in collaboration with the Stanford Digital Economy Lab, releases the National Employment Report®, which provides a high-level look at month-over-month private-sector employment changes across the country.

The April report shows a net gain of 62,000 in private-sector employment (down from the 155,000 net jobs gain in March.) Industry sectors showing positive job growth in April include Leisure and Hospitality (+27,000), Trade/Transportation/Utilities (+21,000), Financial Activities (+20,000), Construction (+16,000), Natural Resources and Mining (+6,000), and Manufacturing (+4,000).

Industry sectors showing negative job growth in April include Education and Health Services (-23,000), Information (-8,000), Professional and Business Services (-2,000), and Other Services (-1,000).

By establishment size, mid-sized businesses (with 50-249 employees) gained 21,000 jobs, “Very Small” businesses (with 1-19 employees) gained 20,000 jobs, mid-sized businesses (with 250-499 employees) gained 19,000 jobs, and large businesses (with 500+ employees) gained 12,000 jobs. The job gains were offset by the “Other Small” businesses (with 20-49 employees), which lost 9,000 jobs.

(Source: ADP)

Intuit QuickBooks Small Business Index

Each month, Intuit QuickBooks, the accounting software provider for small and medium-sized businesses, releases the Small Business Index Report, which analyzes employment and revenue trends for small businesses in the U.S. with one to nine employees across twelve industry sectors.

In April, there were 11,985,300 people employed by U.S. small businesses with one to nine employees, down 0.54% from March and down 8.2% from last April. Jobs were down across all twelve industry sectors tracked by the Index including Professional and Business Services (-13,400), Education and Health Services (-10,900), Retail Trade (-9,900), Leisure and Hospitality (-7,400), Manufacturing (-4,900), Finance and Real Estate (-4,600), Construction (-4,100), Wholesale Trade (-3,500), Transportation and Warehousing (-2,900), Information (-2,300), Agriculture/Natural Resources/Mining (-1,300), and Utilities (-400).

Below is the 13-month total employment trend for U.S. small businesses with one to nine employees –

You can access the full report here.

(Source: Intuit QuickBooks)

Worker Shortage Update

The labor shortages are persisting longer than many economists expected. There continues to be high job demand and slower workforce growth resulting in fierce competition for talent and many open jobs going unfilled. According to the latest data from the U.S. Bureau of Labor Statistics (BLS), the nation had 7.2 million jobs to fill and only 5.4 million hires in March, leaving 1.8 million jobs unfilled.

In March, the largest increases in U.S. job openings were in other services (+20,000), wholesale trade (+10,000), and manufacturing (+4,000).

The largest decreases in job openings were in transportation/warehousing/utilities (-59,000), accommodation and food services (-42,000), construction (-38,000), health care and social assistance (-37,000), private educational services (-25,000), professional and business services (-21,000), financial activities (-14,000), retail trade (-13,000), information (-7,000),and arts/entertainment/recreation (-3,000).

It will take time for this mismatch between labor demand and supply to align. In the meantime, wages will continue to rise as businesses compete to attract talent. You can read the latest job openings summary from BLS here.

Consumer Price Index (CPI – Inflation Rates)

The national inflation rate from March 2024 to March 2025 is 2.4%. This is down from 2.8% in the February 2024 to February 2025 period. Last year, the national inflation rate was 3.5% from March 2023 to March 2024.

The March CPI report marks the thirty-third straight month that year-over-year inflation is below the June 2022 CPI peak high of 9.1%. High prices for some items will likely linger longer.

From a year ago, natural gas prices are up 9.4%, auto insurance is up 7.5%, auto repair services are up 4.8%, housing prices are up 4.0%, eating out prices are up 3.8%, electricity costs are up 2.8%, groceries are up 2.4%, used car prices are up 0.6%, and apparel is up 0.3%.

From a year ago, gasoline prices are down 9.8% and airline fares are down 5.2%. New vehicle prices are unchanged.

The Federal Reserve decided to keep the federal funds rate at 4 ¼ to 4 ½ percent at its Federal Open Market Committee (FOMC) policy-setting meeting May 7. The Fed stated that “although swings in net exports have affected the data, recent indicators suggest that economic activity has continued to expand at a solid pace. The unemployment rate has stabilized at a low level in recent months, and labor market conditions remain solid. Inflation remains somewhat elevated.” The committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the long run. The risks of higher unemployment and higher inflation have increased. You can read more here.

Knoxville falls into the South Size Class B/C (population of 2.5 million or less) grouping. The current inflation rate for this region is 1.9% for the March 2024 to March 2025 period. This is down from 2.3% in the February 2024 to February 2025 period. Last year, the rate was 3.7% from March 2023 to March 2024.

(Source: U.S. Bureau of Labor Statistics; Consumer Price Index; Not Seasonally Adjusted)

Housing Market

Home sales in East Tennessee increased 12% from February to March at a seasonally adjusted annual rate (SAAR) of 19,699. This is a seasonally expected trend; sales were slightly down 3% from March 2024. Home sales in Knox County performed better than the region, increasing 8.6% from the previous year at a seasonally adjusted annual rate (SAAR) of 7,966.

The median home sales price across the East Tennessee region was $375,000 in March, up 7% from a year ago. Knox County’s median home sale price was $399,450, an increase of 6% from a year ago.

Half of the homes sold across the East Tennessee region went under contract in 35 days or less, up from 21 days last year and down from 41.5 days last month.

Active inventory in the East Tennessee region was up 35% from the previous year.

Months of inventory for East Tennessee, or the number of months it would take to exhaust active listings at the current sales rate, decreased to 4 months.

For the last two years, rent has remained relatively flat with only small fluctuations thanks to a wealth of apartment units being built across the price scale from affordable to luxury. This stability was a welcome change after steep increases post-pandemic. Rent growth in 2024 was a mere 0.5%, and over the last 12 months was negative, at -0.4%. However, that trend may be changing. Both Apartment List and RealPage show that rent in East Tennessee increased 0.3% in March and 1.2% in April. Despite nearly 1,500 expected unit completions in 2025, occupancy remains high at 95.4%. The additional demand is likely due to lingering affordability barriers for potential home buyers that keep them in rentals, project delays that have slowed delivery and continued in-migration. Another factor that does affect rent costs is the recently increased costs of multifamily ownership, including insurance and maintenance.

You can subscribe to the East Tennessee REALTORS® monthly Market Pulse Newsletter here.

East Tennessee REALTORS® reports monthly home sales patterns using a seasonally adjusted annualized rate (SAAR), an adjusted rate that takes into account typical seasonal fluctuations in data and is expressed as an annual total. Comparing month-over-month housing market data using this method provides a more accurate depiction of home sales.

(Sources: National Association of REALTORS®; East Tennessee REALTORS®)

(Sources: U.S. Housing & Urban Development – SOCDS – State of the Cities Data Systems; U.S. Census Bureau – Building Permits Survey)

Knoxville Ranks Lower Than Most of its Peer Counties and MSAs For Annual Population Growth Rates

The U.S. Census Bureau officially released the 2024 population estimates for all the nation’s counties and Metropolitan Statistical Areas (MSAs) in March. Knox County’s current population estimate is 506,748, having added 5,172 more people at an annual growth rate of 1.0%. Compared to the ten peer counties, Knox County’s annual growth rate ranks #8. The table below shows all the peer counties ranked by 2023-2024 annual growth rates.

The Knoxville MSA’s current population estimate is 957,608, having added 10,329 more people at an annual growth rate of 1.1%. Compared to the ten peer MSAs, the Knoxville MSA’s annual growth rate ranks #7. The table below shows all the peer MSAs ranked by 2023-2024 annual growth rates.

2024 population estimates for cities have not yet been released. You can access all 2024 population estimates data here.

(Source: U.S. Census Bureau; Population Estimates Program)

National Retail Sales

The total advance monthly retail sales estimate for March 2025 was $737.329 billion (up 15.4% from February and up 3.5% from last March.)

The retail sectors that showed sales growth from last March were Motor Vehicles and Parts Sales (+9.9%), Health and Personal Care Stores (+6.4%), Furniture and Home Furnishings Stores (+5.5%), Food Services and Drinking Places (+4.2%), Non-store Retailers (+4.2%), Building Materials (+3.2%), Miscellaneous Stores (+2.1%), General Merchandise Stores (+1.3%), and Sporting Goods/Books/Hobby/Music Stores (+0.9%).

Retail sectors that showed a decline in sales from last March were Gasoline Stations (-5.8%), Clothing Stores (-1.2%), Electronics and Appliance Stores (-0.9%), and Food and Beverage Stores (-0.5%).

(Sources: U.S. Census Bureau; Advance Monthly Retail Trade Reports, not adjusted)

Tennessee State and Local Sales Tax Collections

The Knoxville MSA region collected $115.298 million in state sales taxes in March (up 1.2% from February and down 2.8% from last March) and Knox County collected $75.758 million in March (up 3.9% from February and down 2.7% from last March.) The state of Tennessee collected $1.066 billion in state sales taxes in March (down 1.8% from February and down 2.7% from last March.)

The Knoxville MSA collected $42.212 million in local sales taxes in March (down 1.9% from February and down 1.0% from last March) and Knox County collected $25.941 million (down 0.9% from February and down 2.3% from last March.)

(Source: Tennessee Department of Revenue)

Recent Business Expansions and New Business Announcements in the Knoxville Region

In this section of ECO, we share announcements of businesses that are expanding their existing operations or locating a new facility in the Knoxville region. If you would like to share your business expansion announcement with us, please send your info to [email protected].

New and existing industries continue to invest in the Knoxville region.

April 15, 2025 – BWXT Enrichment Operations LLC, a subsidiary of BWX Technologies Inc., was awarded a grant to support establishing a facility for the manufacturing of centrifuge assemblies in Oak Ridge. The company announced the purchase of 96.53 acres to build the new facility, invest at least $45 million, and create 60 new jobs. BWXT will be the third company to receive funding from the Tennessee Nuclear Energy Fund. You can read more here.

April 27, 2025 – Safire Technology Group Inc., a Knoxville-based defense and electric mobility company, announced receiving a $4.5 million contract from the U.S. Air Force to develop ruggedized electrified products and systems for the Department of Defense (DoD). The contract is part of a new initiative called the “Advanced Resilient Energy Systems (ARES) Program.” Safire will develop advanced energy storage systems and integrate its ballistic impact-resistant safety technology into various products, including a tactical electric dirt bike, multi-functional body armor, and energy storage formats widely used across DoD. You can read more here.

Knox County Business Licenses

New business licenses issued in March 2025 by Knox County are up 7.5% from February and are down 11.0% from March 2024.

A total of 243 new business licenses were issued in March 2025 compared to 226 in February and 273 in March 2024. The top industry sectors for which business licenses were issued in March 2025 were services, retail, construction, and non-classified establishments.

Below is a chart showing the 13-month trend of business licenses issued by Knox County.

(Sources: Knox County Clerk)

McGhee Tyson Airport (TYS) Passenger and Freight Trends

The Metropolitan Knoxville Airport Authority recorded 292,512 passengers in March (up 32.5% from February’s passenger traffic of 220,840 and up 19.8% from March 2024.)

The total freight recorded in March at TYS was 7,695,696 pounds (up 73.9% from February and up 28.1% from last March.)

According to the Transportation Security Administration, the average daily number of passengers passing through the nation’s TSA checkpoints in March was 2,490,473 (down 0.2% from the March 2024 daily passenger average of 2,495,549 and up 5.5% from the pre-COVID March 2019 average of 2,360,683.) You can view the daily TSA checkpoint travel numbers here.

According to the International Air Transport Association (IATA) , “North American airlines continued to weigh on global performance with a second month of decline. In March, passenger traffic carried by North American airlines, measured in RPK, fell by 1.1%, following a 3.5% drop in February.” You can read more here.

(Sources: Metropolitan Knoxville Airport Authority; U.S. Transportation Security Administration; International Air Transport Association)