U.S., state economies grow slowly this year, faster in 2014

KNOXVILLE, Tenn. (WVLT) -- A new study from UT's Center for Business and Economic Research (CBER) predicts the state and national economies will both grow more slowly this coming year than it did last year. Looking ahead a bit further, the center is a bit more optimistic about 2014.

"The U.S. economy is projected to continue to grow in the quarters ahead and the unemployment rate will continue its slow but steady decline," said Matt Murray, CBER associate director and the report's author. "For Tennessee, the economic outlook calls for modest growth in 2013 followed by substantially stronger growth in 2014."

The study found several positive indicators for strengthening growth in the U.S., including a rebound in the housing sector, tangible returns in construction and manufacturing, and job growth. Murray noted manufacturing jobs will increase for the third year in a row following 13 years of contraction.

Still weighing on the economy, though, is the expiration of the payroll tax cut at the beginning of the year, which Murray argued would decrease consumer spending and overall growth in Tennessee and the country as a whole.

"To put it in perspective, for a Tennessee household earning $50,000 per year, this translates into a tax increase of $1,000," said Murray. "It is expected that the payroll tax increase will have a significant negative effect on taxable sales for the year."

In Tennessee, unemployment is expected to creep down slowly, but still remain above pre-recession levels. For 2013, Murray said unemployment should hover just under eight percent, falling to about 7.5% in 2014.

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