MURFREESBORO, Tenn. — As spring is in full swing, Tennessee’s economy is showing positive, but still mixed, signs of improvement, according to two of the latest quarterly surveys by the Consumer Research Institute at Middle Tennessee State University.

Housed within MTSU’s Jones College of Business, the Consumer Research Institute recently issued results from its latest Tennessee Consumer Outlook Index survey, which revealed that positive consumer sentiment rose 21% statewide, “suggesting a modest rebound after sustained pessimism,” noted survey author Michael Peasley, institute director and assistant professor of marketing.

Yet Tennessee business leaders who responded to the latest Tennessee Business Barometer online survey revealed that positive sentiment continues to strengthen, reaching an all-time high of 55%, while negative sentiment remains low at just 11%.

In short, Tennessee consumers are somewhat subdued, while business leaders are optimistic about the state of the economy with plans to expand.

Consumers more upbeat, still hesitant on big spending

The Overall Consumer Outlook Index rose by 126 points to -85, “showing meaningful improvement this quarter,” Peasley noted, and while confidence remains relatively subdued, the pessimism appears to be easing: 

• 25% of respondents expect economic conditions in Tennessee to improve over the next six months, up from 20% in the previous quarter.
• The share of consumers reporting that their financial situation has worsened over the past year declined sharply to 32%, down from 49% last quarter. 

“Yet consumers are adopting a more cautious financial stance, with many signaling reduced spending and hesitation toward major purchases,” Peasley noted.

• Economic uncertainty remains elevated, with 61% of consumers expressing concern. 
• Only 15% of consumers believe it is a good time to make large purchases, including just 12% for buying a home and 15% for purchasing a car. 
• At the same time, over 40% report saving less than they did a year ago, with some households relying on credit to sustain spending. 

Business leaders very optimistic, but economic uncertainty lingers

• Nearly 47% of leaders report that current economic conditions are favorable, and 57% expect further improvement over the next 12 months. 
• Confidence is similarly strong at the industry level, with 58% describing current conditions as strong and the same share expecting continued gains. 
• Regulatory sentiment has also improved, with 58% indicating favorable conditions today and 48% anticipating additional improvements in the year ahead.

Importantly, this confidence is translating into tangible business actions. 

• Nearly half (49%) of executives plan to increase investment in their firms this year, compared to just 8% who expect to scale back. 
• Growth expectations are also robust, with 62% of leaders projecting higher sales and 50% anticipating employment growth. Together, these indicators suggest that Tennessee businesses are not only optimistic but actively preparing for expansion.

However, Tennessee business leaders pointed to several key challenges and indicators that may influence future economic growth, particularly those related to inflation, labor market conditions, and broader economic uncertainty. 

• Overall, uncertainty remains elevated, with 52% of business leaders expressing concern about the current environment. 
• While inflation has eased from its peak, it remains above long-term targets in many categories, creating uncertainty around pricing power, input costs, and future Federal Reserve policy. 

“These factors make planning and long-term investment more difficult for firms, particularly those sensitive to interest rate changes. As a result, business leaders remain attentive to both macroeconomic risks and consumer signals as they assess future sales and investment outlooks,” Peasley noted.

Full results, including charts and graphics, for the Consumer Outlook Survey and the Tennessee Business Barometer can be found at https://consumer.mtsu.edu. 

About Consumer Outlook Index

The Consumer Outlook Index is based on consumers’ responses to 11 questions measuring their perceptions of the current economy, future economy, jobs, personal finances, and whether now is a good time to make large purchases. Four questions make up the Current Situation Index, four questions make up the Future Expectations Index, and three questions make up the Purchasing Index. 

The scores for each index are computed by adding the percentage of favorable responses to each question and subtracting the percentage of negative responses to each question. A net positive score indicates consumers who hold positive views of the economy outnumber those who hold negative views of the economy (vice versa for a net negative score).

About Tennessee Business Barometer

The Tennessee Business Barometer scores are based on business leaders’ responses to 15 questions that measure their perceptions of the current economy, future economy, regulatory conditions, and economic conditions related to their firm and industry. Five questions make up the Current Economic Situation Index, five questions make up the Future Expectations Index, and five questions make up the Firm Performance Index. 

The Overall Outlook Index is based on all 15 questions. The scores for each index are computed by adding the percentage of favorable responses to each question and subtracting the percentage of negative responses to each question. A net positive score indicates business leaders who hold positive views of the economy outnumber those who hold negative views of the economy (vice versa for a net negative score).

For more information about the surveys, contact Peasley at Michael.Peasley@mtsu.edu.

— Jimmy Hart (jimmy.hart@mtsu.edu)