Financial thoughts

Tennessee’s economy — and the nation’s — is in for a long, hard ride, according to University of Tennessee economists.

The annual report to Gov. Phil Bredesen comes from UT’s Center for Business and Economic Research. It says the state’s future is tied to the national economy, but it doesn’t see a bottom yet.

Things could swing either way, the report says, depending on the effects of the federal economic stimulus plan and whether banks will start extending credit again to consumers and businesses.

“If more financial institutions go under, the financial crisis could become more severe as the remaining banks try to fortify their balance sheets by holding reserves rather than lending,” the report states cash loans. “This would reduce both consumption and investment further than already anticipated, which would lead to larger job losses and higher unemployment.”

The report emphasizes education as a key to higher rates of employment and income. Since Tennessee spends less on average than other states, that doesn’t bode well for Tennessee, the economists say.

The state’s unemployment rate was 7.9 percent in December, compared with 7.2 percent across the country.

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