Tennessee Records Increased Business Filings in 3rd Consecutive Quarter

The Nashville, Tenn., skyline as seen from Cumberland River Park on March 29, 2023. Chase Smith/The Epoch Times

Tennessee’s business sector has continued to flourish, according to a new report, with the third quarter of 2023 witnessing the highest new business filings for a third quarter in more than two decades.

The heightened level of growth, reported in the latest Quarterly Business and Economic Indicators report, underlines the resilience of the state’s economy amid global economic uncertainties.

“We’ve had all-time filing records in each quarter of 2023,” Tennessee Secretary of State Tre Hargett said in a statement. “Tennessee’s economy continues to be strong and resilient, aided significantly by a welcoming business environment of lower taxes, reasonable regulation, and responsible fiscal management.”

Record-Breaking Business Filings

Mr. Hargett’s office announced that the quarter saw 19,304 new entities filing in Tennessee, contributing to a yearly total of 77,596 new businesses, marking a 2.9 percent growth rate.

Mr. Hargett noted that a high level of business filings typically leads to jobs, personal income, and state revenue growth.

Along with the new filings, there were 32,954 annual reports (i.e., business renewals) filed, which represented a 5.2 percent drop compared to another elevated level of business renewals from the third quarter of last year.

“Business filings data are highly seasonal,” the report reads. “For example, the number of new business filings in the third quarter is typically lower than those from the second quarter. For this reason, we largely focus on year-over-year growth rates. Over the last twelve months, Tennessee has recorded 77,596 new entity filings and 331,310 annual reports.”

Geographical Spread and Employment Trends

The growth was particularly noticeable in Davidson (Nashville) and Shelby (Memphis) counties, followed by Knox (Knoxville) and Hamilton (Chattanooga) counties.

These four populous counties accounted for 44.1 percent of new filings statewide, with Knox County expanding by 54.2 percent year-over-year for the third quarter.

Don Bruce, director of the Boyd Center for Business and Economic Research at The University of Tennessee in Knoxville commented on this trend.

“The recording-setting number of new business filings in the third quarter shows the Tennessee economy remains healthy and should continue to see strong growth in employment and income,” he said.​

The report, a collaborative effort between the Boyd Center and the secretary of state, provides a detailed snapshot of the state’s economic health.

In line with the growth in business filings, the state saw an increase in employment, with 8,700 new jobs added in September, keeping the unemployment rate at a low of 3.2 percent, below the national average of 3.8 percent.

Challenges Amid Growth

Despite the positive trends, the increase in new businesses has also led to a rise in business closures, as some of the businesses started in the past year have struggled to remain open.

The report noted that there were 59,589 dissolutions filed in the third quarter of 2023, representing a 4.1 percent increase over the same quarter last year. The report states that the majority of dissolutions in any given year typically occur in the third quarter, as business entities are “administratively closed” on Aug. 1 if they fail to file an annual report.

Lower Broadway in Nashville, Tenn., is also known as Honky Tonk Row, a series of bars offering live music from the middle of the day to the wee hours of the next. Kevin Revolinski

“Thus, more businesses dissolved this year than in 2022,” the report reads. “However, this could merely reflect the historically high level of business formations observed over the last four years. As a result, the number of business closings (i.e., dissolutions) has also risen as some proportion of new businesses do not remain in operation from one year to the next.”

Detailed Economic Metrics

Tennessee’s economy exhibited sustained growth in the third quarter of 2023, with nonfarm employment increasing by 8,700 jobs in September, contributing to a yearly addition of 54,000 jobs. The state maintained a low unemployment rate of 3.8 percent, reflecting a resilient job market.

Personal income in Tennessee reached $433.6 billion in the second quarter, with a real income growth of 1.7 percent after inflation adjustment. Tax revenues in September also saw an increase, although the report notes that it was likely a result of a three-month food sales tax holiday in the state from August through October.

What’s Next

The third quarter of 2023 shows a thriving economic environment in Tennessee, marked by a surge in new business filings and stable employment rates, while at the same time showing the other side—that some of the new businesses will likely fail.

The state’s ability to foster a business-friendly climate while navigating the challenges of new business sustainability shows resilience and the potential for more growth in the fourth quarter.

Mr. Hargett said the record-breaking filings highlight Tennessee’s strength and resilience, offering a promising outlook for the future of the state’s economy.