The Nashville metropolitan economy will lose about $1 billion next year because of the mortgage crisis, according to a national report just released this past week
The report, prepared for the U.S. Conference of Mayors, found that the economic slow down caused by mortgage defaults and real estate foreclosures will cut the expected growth of the area's Gross Metropolitan Product by 0.7 percentage point, to 2.5 percent. The Gross Metropolitan Product is the measure of the total value of the goods and services produced in a community.
The Nashville-Davidson County-Murfreesboro Metropolitan Statistical Area had a gross metropolitan product of $60.3 billion in 2005, ranking it 40th in the country, according to another report released by the mayors group in January.
Rising home prices had fueled consumer spending, which drove economic growth, the mortgage crisis report states.
Now, the reverse is happening.
The report predicts economic growth of less than 2 percent next year in 128 of the 361 areas that were studied.
Other considerations are the slow down in sales tax revenues generated from the strong housing market that supported local the local economies. Unemployment triggered by the slow down reaches further than just the real estate and mortgage industries. Contractors, building product suppliers and retailers will all feel the effect.
Other Tennessee metropolitan areas and their projected declines include:
- Jackson, 0.7 percentage point, $77.2 million.
- Clarksville, 0.8 percentage point, $13.7 million
- Knoxville, 0.6 percentage point, $311.9 million.
- Chattanooga, 0.5 percentage point, $166.3 million.
- Memphis, 0.6 percentage point, $482 million.