The U.S. state ofTennessee contains a diverse economy that is made up of many sectors with a mix of industries includingmanufacturing,agriculture, healthcare, andtourism. The state is home to several major corporations, includingFedEx, the largest courier company in the world, andAutoZone, the largest retailer of auto parts in the United States.
Agriculture is an important part of the economy of Tennessee, with the state ranking among the top producers of soybeans, tobacco, and cotton in the United States. The state is also home to a thriving healthcare industry, withNashville being a major hub for healthcare services and research. Tourism is another significant contributor to the economy of Tennessee, with millions of visitors each year drawn to the state's natural beauty and cultural attractions, including theGreat Smoky Mountains National Park and theCountry Music Hall of Fame.
As of 2020, Tennessee had agross state product of $364.5 billion.[1]In 2019, the state'sper capita personal income was $29,859. Themedian household income was $58,516 in 2021.[2] About 13.9% percent of the population was below thepoverty line.[3] In 2018, the state reported a total employment of 2,683,214, and a total number of 138,269 employer establishments.[3]
For 2012, the state held an asset surplus of $533 million, one of only eight states in the nation to report a surplus.[4] Tennessee is aright to work state, as are most of its Southern neighbors.[5]Unionization has historically been low and continues to decline as in most of the U.S. generally.[6]
Tennessee has a reputation as low-tax state and is usually ranked as one of the five states with the lowest tax burden on residents.[7] It is one of nine states that do not have ageneral income tax; thesales tax is the primary means of funding the government.[8] TheHall income tax was a tax imposed on mostdividends andinterest. The tax rate was 6% from 1937 to 2016, but was completely phased out by January 1, 2021.[9] The first $1,250 of individual income and $2,500 of joint income was exempt from this tax.[10]
The state's sales anduse tax rate for most items is 7%, the second-highest in the nation, along with Mississippi, Rhode Island, New Jersey, and Indiana. Food is taxed at a lower rate of 4%, but candy, dietary supplements and prepared food are taxed at 7%.[11] Local sales taxes are collected in most jurisdictions at rates varying from 1.5% to 2.75%, bringing the total sales tax to between 8.5% and 9.75%, with an average rate of about 9.5%, the nation's highest average sales tax.[12]Intangible property tax is assessed on the shares of stock of stockholders of any loan, investment, insurance, or for-profit cemetery companies. The assessment ratio is 40% of the value times the jurisdiction's tax rate.[13] Since January 1, 2016, Tennessee has had no inheritance tax.[14]
While the sales tax remains the main source of state government funding,property taxes are the primary source of revenue for local governments.[13]
Tennessee has the eighth-most farms in the nation, which cover more than 40% of the state's land area, and have an average size of about 155 acres (0.63 km2).[15] Cash receipts for crops and livestock have an estimated annual value of $3.5 billion, and the agriculture sector has an estimated annual impact of $81 billion on the state's economy.[15]
Beef cattle is the state's largest agricultural commodity.[16] Tennessee ranks 12th in the nation for the number of heads of cattle, with more than half of the state's farmland dedicated to cattle grazing.[17][15]Soybeans are the most common crop produced in the state, followed bycorn andcotton.[16] Most soybeans in Tennessee are grown in West and Middle Tennessee, especially in the northwestern corner of the state.[18]Broilers andpoultry constitute the state's second most common livestock commodity.[16]
Althoughcotton was an early crop in Tennessee, large-scale cultivation of the fiber did not begin until the 1820s with the opening of the fertile soils and level plains of West Tennessee for European settlement.[19] Today, Tennessee ranks seventh overall in the nation in cotton production, most of which is still grown in the western part of the state.[20] Tennessee has been one of the toptobacco-producing states for most of its history, which is predominantly grown in the Ridge-and-Valley region of East Tennessee, and still ranks fourth nationwide.[21]Springfield, Tennessee is known for its dark fired tobacco.[22] The state is also the sixth-largest producer oftomatoes, withGrainger County being recognized as one of the top tomato-producing communities in the nation.[23][24] Other important cash crops raised in the state includehay,wheat,eggs, andsnap beans.[15][21]
The Nashville Basin is a top equestrian region, due to soils that produce grass ideal for feeding horses. TheTennessee Walking Horse, first bred in the region in the late 18th century, is one of the most recognized horse breeds in the world.[25] The state also ranks second nationwide formule breeding and the production ofgoat meat.[21]
Horticultural products are an important aspect of the economy of the Eastern Highland Rim, particularly inWarren County, which is nicknamed the "Nursery Capitol of the World".[26] Forests cover more than half of Tennessee's land area, but the state's timber industry is largely concentrated on the Cumberland Plateau, which ranks as one of the top producers ofhardwood nationwide.[27]
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UntilWorld War II, Tennessee, like most Southern states, remained predominantly agrarian. But Chattanooga became one of the first industrial cities in the south in the decades following the Civil War, when many factories, including iron foundries, steel mills, and textile mills were constructed there.[28] Most of Tennessee's industrial growth, however, began with the federal investments in the Tennessee Valley Authority and the Manhattan Project in the 1930s and 1940s. The state's industrial and manufacturing sector continued to rapidly expand in the succeeding decades, and Tennessee is now home to more than 2,400 advanced manufacturing establishments, which produce a total of more than $29 billion worth of goods annually.[29] Today, Tennessee's top manufacturing outputs includeautomotive and transportation products,processed foods and drinks,chemicals,electrical equipment andappliances, andfabricated metals, and machinery.[30]
Since the early 1980s, Tennessee has emerged as a major hub for the automotive industry, which is now the largest manufacturing sector in the state.[31]Nissan'sassembly plant inSmyrna, is the largest automotive assembly plant in North America.[32] Three other auto manufacturers have assembly plants in Tennessee:General Motors inSpring Hill,Van Hool inMorristown, andVolkswagen inChattanooga.[33][34]Ford is constructingan assembly plant inStanton that is expected to be operational in 2025,[35] andMullen Technologies is constructing a plant in Memphis.[36] In addition, the state is home to more than 900 automotive suppliers.[37] Nissan moved its North American corporate headquarters from California toFranklin in 2005,[38] andMitsubishi Motors did the same in 2019.[39]
Food and drink production has also been an important industry in Tennessee since the late 19th century, and is today the second largest manufacturing sector. The world's firstCoca-Cola bottling plant opened in Chattanooga in 1899.[40] Other well-known brands produced in the state includeJack Daniel's,[41]George Dickel,[42]Mountain Dew,[43]Mayfield,Goo Goo Cluster,[44]Moon Pie,[45]Bush's Beans,[46]Little Debbie,[47]M&M's,[48] andPringles.[49]
Tennessee is one of the top producers of chemicals, especially non-petrochemicals.[30] Chemical products manufactured in Tennessee includeindustrial chemicals,paints,pharmaceuticals,plastic resins, andsoaps andhygiene products. Kingsport is the headquarters ofEastman Chemical Company, which was founded there in 1920. Other important chemical manufacturers includeMatheson inNew Johnsonville,Wacker Chemie andOlin Corporation inBradley County,Resolute Forest Products in Calhoun, andHemlock Semiconductor inClarksville.[citation needed]
Tennessee is also one of the top states whereconsumer electronics, electrical appliances, and other electrical equipment historically have been produced, including brands such as Monogram Refrigeration,Whirlpool,Thomas & Betts,LG Electronics,Magnavox, andElectrolux.[50] Other major products manufactured in the state include nonelectrical machinery and fabricated metal products.[51]
Tennessee's commercial sector is dominated by a wide variety of companies, but its largest service industries include health care, transportation, music and entertainment, banking, and finance. Large corporations with headquarters in Tennessee includeFedEx,AutoZone,International Paper, andFirst Horizon Corporation, all based in Memphis;Pilot Corporation andRegal Entertainment Group in Knoxville;Hospital Corporation of America andCaterpillar Inc., based in Nashville;Unum in Chattanooga; Acadia Senior Living andCommunity Health Systems in Franklin;Dollar General in Goodlettsville, and LifePoint Health,Tractor Supply Company, andDelek US in Brentwood.[52][53]
Theresearch and development industry in Tennessee is also one of the largest employment sectors, mainly due to the prominence ofOak Ridge National Laboratory (ORNL) and theY-12 National Security Complex in the city ofOak Ridge. ORNL conducts scientific research inmaterials science,nuclear physics, energy,high-performance computing,systems biology, andnational security.[54] It is also the largestnational laboratory in theDepartment of Energy (DOE) system by size, and has the third highest budget.[55] Since the 1990s, the geographical area between Oak Ridge and Knoxville has been known as the Tennessee Technology Corridor, with more than 500 high-tech firms located in the region.[56] The technology sector is also a rapidly growing industry in Middle Tennessee, particularly in the Nashville metropolitan area.[57] In 2018,Amazon established its East Coast operations center in Nashville, and plans to eventually employ about 5,000.[58]
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Tennessee's electric utilities are regulated monopolies, as in many other states.[60][61] As of 2020, theTennessee Valley Authority owned over 90% of the state's generating capacity.[62]Nuclear power is Tennessee's largest source of electricity generation producing about 47.3% of its power in 2020. The same year, 20.2% of the power was produced fromnatural gas, 18.4% fromcoal, 13.4% fromhydroelectric power, and 1.6% from otherrenewables. About 61.3% of the electricity generated in Tennessee producesno greenhouse gas emissions.[63] Tennessee is a net consumer of electricity, receiving power from other TVA facilities in neighboring states, such as theBrowns Ferry Nuclear Plant in northern Alabama.[64]
Tennessee is home to the two newest civiliannuclear power reactors in the United States, atWatts Bar Nuclear Plant inRhea County. Unit 1 began operation in 1996 and Unit 2 in 2016, making it the first and only new nuclear power reactor to begin operation in the United States in the 21st century.[65] As of 2020, officials atOak Ridge National Laboratory and the TVA are studying advancements in nuclear power as an energy source, includingsmall modular reactors, in a joint effort.[66] Tennessee was also an early leader in hydroelectric power, first with the now defunctChattanooga and Tennessee Electric Power Company; later, theUnited States Army Corps of Engineers and the TVA constructed several hydroelectric dams on Tennessee rivers.[67] Tennessee is the third-largest hydroelectric power-producing state east of theRocky Mountains.[68]
Tennessee has very little petroleum and natural gas reserves, but is home to one oil refinery, in Memphis.[68]Bituminous coal is mined in small quantities in the Cumberland Plateau and Cumberland Mountains.[69] There are sizable reserves oflignite coal in West Tennessee that remain untapped.[69] Coal production in Tennessee peaked in 1972, and today less than 0.1% of coal production in the United States comes from Tennessee mines.[68]
Tennessee is the nation's leading producer ofball clay.[69] Other major mineral products produced in Tennessee includesand,gravel,crushed stone,Portland cement,marble,sandstone,common clay,lime, andzinc.[69][70] TheCopper Basin, in Tennessee's southeastern corner in Polk County, was one of the nation's most productivecopper mining districts between the 1840s and 1980s.[71] Mines in the basin supplied about 90% of the copper the Confederacy used during the Civil War,[72] and also marketed chemical byproducts of the mining, includingsulfuric acid.[73] Mining activities in the basin resulted in a majorenvironmental disaster, which left the landscape in the basin barren for more than a century.[74] Iron ore was another major mineral mined in Tennessee until the early 20th century.[75] Tennessee was also a top producer ofphosphate until the early 1990s.[76]
Tourism contributes billions of dollars every year to Tennessee's economy, and it is the 11th-most visited state in the nation.[78] In 2019 a record 126 million people visited the state, up from 119 million the previous year.[79][80] This resulted in $23.3 billion of tourism-related spending in the state, approximately $1.1 billion of which came from international travelers.[81] Tax revenue from tourism totaled $1.92 billion.[82] Each county saw at least a $1 million economic impact from tourism, while 21 counties received at least $100 million, and five (Davidson,Shelby,Sevier,Knox, andHamilton) received more than $1 billion.[81] Tourism-related jobs in the state reached 195,000.[82]
Tennessee is home to theGreat Smoky Mountains National Park, the most visited national park in the U.S., with more than 12 million visitors annually.[77] The park anchors a large tourism industry based primarily in nearbyGatlinburg andPigeon Forge, which consists of such attractions asDollywood, the most visited ticketed attraction in Tennessee,Ober Gatlinburg, and Ripley's Aquarium of the Smokies.[41] Major attractions in Memphis includeGraceland, the home ofElvis Presley,Beale Street, theNational Civil Rights Museum, theMemphis Zoo, and theStax Museum of American Soul Music.[83] Nashville contains many attractions related to its musical heritage, includingLower Broadway, theCountry Music Hall of Fame, theRyman Auditorium,Grand Ole Opry, and theGaylord Opryland Resort. Other major attractions in Nashville include theTennessee State Museum,The Parthenon, and theBelle Meade Plantation.[84] Major attractions in Chattanooga includeLookout Mountain, theChattanooga Choo-Choo Hotel,Ruby Falls, and theTennessee Aquarium, the largestfreshwater aquarium in the United States.[41] Other attractions include theAmerican Museum of Science and Energy in Oak Ridge, theBristol Motor Speedway in Bristol,Jack Daniel's Distillery in Lynchburg, and theHiwassee andOcoee rivers in Polk County.[41]
Four Civil War battlefields in Tennessee are preserved by the National Park Service:Chickamauga and Chattanooga National Military Park,Stones River National Battlefield,Shiloh National Military Park, andFort Donelson National Battlefield.[85]Big South Fork National River and Recreation Area is within theCumberland Mountains in northeastern Tennessee. Other major historical attractions preserved by theNational Park Service includeCumberland Gap National Historical Park,Overmountain Victory National Historic Trail,Trail of Tears National Historic Trail, and theManhattan Project National Historical Park.[86] Tennessee is home to eightNational Scenic Byways, including theNatchez Trace Parkway, theEast Tennessee Crossing Byway, theGreat River Road, theNorris Freeway,Cumberland National Scenic Byway,Sequatchie Valley Scenic Byway,The Trace, and theCherohala Skyway.[87][88] Tennessee maintains 45 state parks, covering some 132,000 acres (530 km2). Many reservoirs the TVA created to generate electricity have also created water-based tourist attractions and real estate development with an estimated $12 billion economic impact based on a 2016 study by the University of Tennessee Institute of Agriculture.[89]
