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The Atlanta Fed's SouthPoint offers commentary and observations on various aspects of the region's economy.

The blog's authors include staff from the Atlanta Fed's Regional Economic Information Network and Public Affairs Department.

Postings are weekly.


SouthPoint

11/20/2014


Music City Is Playing Your Song

Nashville has long been synonymous with country music, and the local economy is closely tied to the music industry. It's not unusual to see a country music star dining in a restaurant or showing up at a local music club for a jam session. In short, music looms large over many aspects of life and culture here. But you might ask, what exactly is the music industry's economic impact on Nashville? Good question! Let's explore.

Music touches several sectors of the Nashville economy. Banking, construction, and hospitality all benefit from the music industry. The Nashville Chamber of Commerce put together a thorough study on the music industry's economic impact. The study revealed that Nashville stands toe to toe with—and in many ways surpasses—New York and Los Angeles for having a fully self-reliant music industry, which in layman's terms means you can write, record, produce, promote, finance, and distribute music without ever leaving the city. Of course, music starts with musicians, singers, and songwriters, but today's music business requires specialized talents that go beyond the stage. Creative, technical, and managerial skills are abundant in the Nashville metropolitan statistical area (MSA). The chamber's study found that relative to Nashville's size, the amount of talent in the music industry at all levels of the process is extraordinary.

The local music industry employs a vast array of people across a correspondingly vast array of sectors. In 2012, according to the chamber's study, the Nashville MSA employed almost 3,000 artists and musicians with an average annual pay of more than $85,000. Music publishing employed almost 1,500 people, with an average annual pay of nearly $75,000. The list goes on and on, including musical instrument manufacturing, musical supply stores, record stores, record production, radio networks, and recording studios. It's almost impossible to tell where the employment influence of the music industry begins and ends. Many jobs are directly related to music, but others are indirectly related and not classified in a way that shows up in a study of employment in the music industry. All in all, the chamber's study indicated that the density of activity in Nashville's music industry is some 10 times greater than New York or Los Angeles, and even greater than cities such as Atlanta, Austin, and New Orleans. Core music industry employment per 1,000 people exceeds all other U.S. cities by a large margin.

The chamber of commerce's report also found that some 56,500 people's employment was tied to the music industry, resulting in labor income of over $3.2 billion and contributing almost $5.5 billion to the local economy, with a total output of almost $10 billion, a large portion of the Nashville MSA's $85 billion gross domestic product.

But what about other areas of the economy that benefit from the music industry's contributions? According to a July 2013 article from the Atlantic CityLab, industries such health care, transportation, and food service benefit greatly. The article pointed out that work in Nashville's full-service restaurants has grown 10 percent since 2009, and the entertainment industry can be credited for a good bit of that growth. The article also pointed out the multiplier effect the music industry has on local employment. For every 10 jobs created in the music industry, another 52 positions are created in the broader economy.

Needless to say, the music industry is important to the Nashville region. Whether it's the entertainment talent, the history, or the culture, music thrives here. So put on your cowboy boots, your cowboy hat, and blue jeans. Nothing says "Welcome to Nashville" more. We are not called Music City USA for nothing!

By Troy Balthrop, a Regional Economic Information Network analyst in the Atlanta Fed's Nashville Branch

November 20, 2014 in Employment, Entertainment, Jobs, Nashville, Tennessee | Permalink

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10/08/2013


Middle Tennessee’s Economy: What a Difference a Year Makes

At the end of September, Middle Tennessee State University’s Business and Economic Research Center hosted the school’s annual economic outlook conference. In October of 2012, we reported on the presentation by the center’s director, Dr. David Penn, who spoke at last year’s conference about his forecast for Middle Tennessee’s economy. In 2012, his forecast was not particularly upbeat, although he did highlight a few positive signs emerging in the region, particularly in manufacturing and housing. Fast-forward a year, and the economic picture is much brighter, according to Dr. Penn’s presentation at this year’s conference.

The two positive signs, manufacturing and housing, have turned into powerful trends that are driving Middle Tennessee’s economy, especially in Nashville. The manufacturing sector is performing exceptionally well, propelled by the expansion in auto manufacturing. The Nashville-area manufacturing sector has seen 11,000 new jobs the since 2010. While employment gains in the sector have slowed in 2013, recent job announcements from a number of manufacturers, including Nissan and GM, suggest acceleration in the near term.

The housing sector has also shown a lot of strength over the past year. Home sales are booming, with home inventory relative to sales now at the lowest level since 2006. Single-family home construction is rapidly increasing. Dr. Penn estimates that home price growth could accelerate and may even approach prerecession levels next year.

The Nashville area’s quickening economic tempo has fueled job creation. In terms of the pace of job growth, two counties in the Nashville metropolitan statistical area (MSA), Rutherford and Williamson, are in the top 15 counties among more than 300 largest U.S. counties. Total employment in the Nashville MSA was growing faster than in any other major metro area (with payroll employment of at least 500,000) in the second quarter on a year-over-year basis. There are now nearly 50,000 more jobs than in 2007. Employment growth is also broad based across industries led by job gains in professional and business services and manufacturing. In fact, in the second quarter the year-over-year pace of job growth in those two industries in Nashville ranked first and second, respectively, among the country’s largest MSAs.

Measured by the unemployment rate, however, Nashville’s labor market does not look as rosy—the unemployment rate has moved higher in recent months. But the news is not all bad since the increase in the unemployment rate is mostly a result of people entering the labor force at a faster rate than the pace of job creation. Perhaps because of improved job prospects, the labor force participation rate in Nashville has been increasing for more than two years after a sharp drop-off in 2010.

What about Nashville’s economy a year from now? Dr. Penn projects ongoing strength in housing, continued improvement in manufacturing, and a declining unemployment rate as a result of strong job growth.

photo of Galina AlexeenkoBy Galina Alexeenko, a Regional Economic Information Network director in the Atlanta Fed’s Nashville Branch


October 8, 2013 in Economic Growth and Development, Economic Indicators, Employment, Housing, Manufacturing, Nashville, Tennessee | Permalink

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08/15/2013


Cleveland Rocks!

Readers of SouthPoint will recall my affinity for Cleveland’s professional sports teams. It’s been a long time since we have won anything (1964, to be exact; the year BEFORE I was born, by the way). But I’ll proclaim the drought partially over with Jason Dufner’s recent win at the PGA Championship. “Duf” is a Cleveland native, so I think that should count. He’s also lived in the Southeast and went to college here, so it’s a win for the Sixth Federal Reserve District as well.

Since I’m not a sportswriter, I’ll cut right to the point of the Cleveland link. It’s not really a link between Cleveland, Ohio, and sports victories. It’s a link between Cleveland, Tennessee, and economic victories.

According to data from the U.S. Bureau of Labor Statistics, the Cleveland, Tennessee metro area has experienced the largest increase in total employment (on a percent change basis) since the onset of the national recession in late 2007, at 7.8 percent. It appears that Cleveland is benefiting from its proximity to the Volkswagen auto manufacturing plant in Chattanooga and the rebound in national housing, which has increased demand for household durables—something that is benefiting the Whirlpool appliance manufacturing plant in Cleveland, as an Atlanta Fed publication recently noted.

Hinesville-Fort Stewart, Georgia, is next on the list with a 7.7 percent gain since December 2007. Much of that gain is no doubt tied to military base adjustments, as are the gains logged by Clarksville, Tennessee, and Warner Robins, Georgia. Nashville’s 6 percent increase is perhaps the most impressive and has the most impact, as it represents a net increase of 46,300 jobs. Knoxville is the other Tennessee metro area whose current employment levels are ahead of December 2007 readings.

In Louisiana, employment levels in the cities of Lafayette, New Orleans, and Baton Rouge are currently above prerecession levels. Alabama has two metro areas in positive territory: Auburn-Opelika and Tuscaloosa. Currently, Auburn is ahead of Tuscaloosa in terms of employment gains, and I will diplomatically refrain from making any analogies to college football...

The following table lists the region’s metro areas and shows the net change in total employment from December 2007 to June 2013 in terms of both total and percent change. What stands out is the fact that just 11 of the 65 metro areas in the region are at employment levels that are higher than they were in December 2007. It’s sobering to think that employment levels, although improving, are still so far below prerecession levels in most the of region.



That said, it is just as important to acknowledge that the region’s labor markets are improving. The chart below shows the level of total employment and the unemployment rate for the six states that are wholly or partially in the Atlanta Federal Reserve’s District (Alabama, Florida, Georgia, Louisiana, Mississippi, and Tennessee).



As Atlanta Fed President Dennis Lockhart noted in his August 13 speech to the Atlanta Kiwanis,

We have continued to see steady progress in economic fundamentals, in my opinion. Progress is evident, and we should not lose sight of that.

Photo of Mike ChrisztBy Mike Chriszt, a vice president in the Atlanta Fed’s public affairs department


August 15, 2013 in Employment, Growth, Nashville, Southeast, Tennessee, Unemployment | Permalink

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05/21/2013


Nashville’s Music City Center: If You Build It, They Will Come

Borrowing and slightly altering a line from the movie Field of Dreams somewhat applies to Nashville’s high expectations for its new state-of-the-art convention center. The new downtown Nashville facility, aptly named “The Music City Center,” is scheduled to open May 19. Located in the heart of downtown Nashville and within walking distance of the famous Ryman Auditorium and the Country Music Hall of Fame, Nashville expects the convention center to serve as a catalyst for economic development by luring hundreds of thousands of visitors to the city each year. It will be the centerpiece for activity in an already lively downtown area.

The Nashville metropolitan statistical area is already riding a wave of employment expansion. Tennessee’s unemployment rate is slightly above the national rate; however, Nashville’s rate is more than a full percentage point lower. The city’s employment expanded 3.8 percent in 2012 and has expanded 16.6 percent since 2001. Throw a deep recession into the middle of that time frame, and the numbers are impressive. The city’s diverse economy, along with the state’s business friendly environment are just a couple of reasons why Forbes magazine recently ranked Nashville second to only San Francisco on its list of best cities for jobs in 2013.

The Music City Center (MCC) project was born in 2004 when metro Nashville government felt the city needed more convention space. In 2007, Nashville Mayor Karl Dean, along with local business leaders and community activists, pushed the project to the front of Nashville’s developmental priorities. The Metro Council of Nashville approved construction of the project in January 2010. Three years later, the grand opening is upon us.

The massive building, dubbed a “widescraper” due to its enormous footprint, covers four city blocks and is longer than 12 football fields. The building has a total of 1.2 million square feet, with a 350,000-square-foot exhibit hall, a 57,000-square-foot ballroom and 1,800 parking spaces. The center also features 60 meeting rooms and 32 docks to allow seamless loading for convention center exhibitors. The “Green Roof” is four acres of a grass-like plant called sedum. The roof also features the outline of—what else?—a guitar.

The Music City Center’s green roof and guitar motif
The Music City Center’s green roof and guitar motif (photo courtesy of the MCC)


The MCC’s economic benefits could also be significant and immediate. According to the Nashville Convention and Visitors Corporation, hotel room bookings for the center have already surpassed 800,000. The Omni is constructing an 800-room hotel adjacent to the MCC that has surpassed 250,000 nights booked, which is four months ahead of schedule. Another 18 hotel projects are under way or proposed in the downtown market.

The city has already seen a spike in hotel tax revenue because of an increase in leisure travel. A total of 101 meetings with dates ranging between 2013 and 2026 are now booked at the convention center, with another 300 considering Nashville for their meeting, according to Music City Center CEO Charles Starks. The annual impact is estimated to be about $200 million, with more than 1,500 jobs being added to the local economy. Business owners in the downtown area are counting on the new convention center to bring an array of visitors.

Dennis Lockhart, president of the Federal Reserve Bank of Atlanta (right), and Larry Atema of the Nashville Convention Center Authority tour the Music City Center.
Dennis Lockhart, president of the Federal Reserve Bank of Atlanta (right), and Larry Atema of the Nashville Convention Center Authority tour the Music City Center.


Saying that Nashville has high hopes for the Music City Center is an understatement. The city has built a top-of-the-line facility to attract conventions from all across the nation. The project should add to Nashville’s growing economy.

Nashville built it and, based on early indications, they are indeed coming.

By Troy Balthrop, a Regional Economic Information Network analyst in the Atlanta Fed’s Nashville Branch

May 21, 2013 in Economic Growth and Development, Employment, Nashville, Tennessee, Tourism | Permalink

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10/31/2012


From "Hee Haw" to Hollywood

When people think of Nashville, most people think of one thing: country music. Legendary venues such as the Grand Ole Opry and Ryman Auditorium are the popular sites, but dozens of smaller music venues such as the Bluebird Café, Tootsie's Orchid Lounge, and the Wildhorse Saloon dot the Nashville landscape as well. Public administration officials tout the name "Music City USA" as a way to capitalize on tourism and entertainment revenue. In fact, the city's new $585 million convention center, to be completed in 2013, holds the name Music City Center. The city has been no stranger to celebrity sightings, red carpet events, or music video shoots, but when television dressing room trailers, film equipment trucks, and stars such as Connie Britton (well-known for her roles in Spin City and Friday Night Lights) rolled into Nashville, the landscape began to change.

For some time now, cities around the Southeast, such as Atlanta and New Orleans, have increasingly seen growth from the film industry. Nashville is now joining the ranks. When the new ABC prime-time drama Nashville started filming during the summer of 2012, it produced a spark in Nashville's television industry and has infused millions of dollars into the local economy. Nashville residents, city and state officials, film industry workers, caterers, hotels, and local attractions are taking note of the economic impact on the state's capital city from filming each episode.

Crews of approximately 150 people work on the filming and production of the show, which is scheduled to last at least through the end of 2012. The direct and immediate expenditures can be quantified in several different ways. For instance, some of the television crew members are from out of town, so things such as food and lodging expenses and trade done with local vendors can add up. Local craftsmen such as electricians and carpenters have been recruited to work on the set. Additionally, some 350 to 400 Tennessee vendors have been involved in the show's production.

Producers of the show estimate that $44 million in direct spending could occur in Tennessee if the full 22-episode season is filmed in Nashville. While the longer-term benefits can be impossible to measure, the show's producer considers it "a 43-minute advertisement, prime time, once a week" for Nashville each time the show airs. About nine million people watched the premiere. In a perfect world, this would equate to nine million people potentially wanting to visit Nashville and spend money on souvenirs, food, and visiting local attractions. The Blue Bird Café, which is featured prominently in the show, is collecting little direct immediate revenue, but the publicity it is receiving could result in revenue for years down the road. John Valentine, vice president of Lionsgate, which is one of the production companies filming Nashville, estimates the overall impact could exceed $75 million in one season. This sum, of course, is contingent on the show being extended from its current 13-episode deal to a full 22-episode season.

The city's mayor, Karl Dean, is pleased that the show can provide national exposure to Music City and views it as an asset to Nashville's national profile. Of course, this exposure comes with a price. The state's Economic and Community Development Department has approved reimbursable grants of $7.5 million for the show, which covers 17 percent of spending in Tennessee if a full season airs. A combination of state grants and an additional tax credit has allowed the show to obtain incentives that accounted for 32 percent of the Tennessee-based costs. Based on recent legislation changes that would cap reimbursements at 25 percent, Nashville producers hope to convince state economic and community development officials of a larger, multifaceted incentive package.

Far removed from the barnyards and cornfields that we used to see on Hee Haw, country music is now big business. Music Row is alive and well in Nashville and cashing in on the glamorous side of country. The small screen drama of romance, music tour deals, and even a little local politics as seen on Nashville is providing the old pickin'-and-grinnin' sessions with some competition in the Music City. And if you've never been to a pickin-and-grinnin', well, then you're missing out; come to Nashville and experience one of the finer things in life.

By Amy Pitts, senior REIN analyst, and Troy Balthrop, REIN analyst, both at the Atlanta Fed's Nashville Branch


October 31, 2012 in Nashville, Tourism | Permalink

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07/27/2012


Positive Housing Trends Seen in Middle Tennessee

Staff associated with the Atlanta Fed's Center for Real Estate Analytics traveled to Nashville last week to meet with local real estate industry contacts and discuss recent developments in housing trends there. Contacts included leading real estate agents, builders, lenders, and appraisers. The positive housing trends that have been witnessed in other markets and reported in previous blog posts were echoed by real estate contacts in Middle Tennessee.

Contacts reported that demand has picked up. Middle Tennessee has seen an increase in sales; the Greater Nashville Association of Realtors reported that home sales were up 24 percent year to date in June. Gains were largely thought to be driven by first- and second-time homebuyers in new construction, move-down buyers looking to purchase smaller and cheaper homes, and investors purchasing distressed properties.


Contacts expect sales will continue to increase throughout 2012. Improvements in Nashville's home sales are thought to be driven by several factors—including the relocation of large firms to the area that will soon begin transferring in their employees—and a sense of urgency by buyers looking to take advantage of the low interest rate environment before house prices appreciate significantly in value.

The inventory of vacant developed lots (VDL) is steadily declining; data provided by Metrostudy reveal that VDL inventory is down 24 percent from its peak in the first quarter of 2010. Our contacts referred to this decline several times, and they expressed concern over builders' and developers' inability to access financing for more new construction.


The inventory of distressed properties is also shrinking. Several contacts reported that distressed inventory has been largely absorbed, a notable improvement from a year earlier. This absorption bodes well for prices, given that distressed properties tend to place downward pressure on house prices in a community. Further, our contacts expect the levels of distressed inventory to continue decreasing over the next six months.


With increasing demand and a shrinking supply of lots and distressed properties, it is no surprise that house prices are slowly starting to appreciate in value. Real estate contacts familiar with the market indicated that house prices have reached a bottom.


And when asked about expectations for house price growth going forward, most contacts expect modest growth to occur.


Again, while these responses represent only a segment of the regional housing market, we read the results as further indication that the housing market is making progress toward recovery.

Photo of Jessica DillBy Jessica Dill, a senior analyst in the Atlanta Fed's Center for Real Estate Analytics


July 27, 2012 in Housing, Nashville, Real Estate | Permalink

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