Economy/Cost of Living
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With over 6 million people, Tennessee ranks 17th among the states in population size. The largest
cities in the Volunteer State are Memphis,
Nashville, Knoxville, Chattanooga,
Clarksville, Murfreesboro, Jackson,
Johnson City, Kingsport, and Franklin.
Historically, Tennessee’s economy relied heavily upon agriculture. While not as prominent today,
agriculture remains important. Some important livestock resources from Tennessee farms include beef
cattle, broiler chickens, dairy products, hogs, chicken eggs, sheep and lambs, wool, and honey.
Tennessee’s moderate climate affords a wealth of crops, such as soybeans, cotton, corn for grain,
tobacco, wheat, hay, and sorghum grain. Some important fruits and vegetables include tomatoes, snap
beans, apples, and peaches. Mushrooms are also important. Additionally, greenhouse and nursery
items such as shrubs and fruit trees aid the Volunteer State economy.
Tennessee contains valuable mineral wealth. Important mined products in Tennessee include
limestone deposits and the resulting crushed stone, coal, zinc, clays, phosphate rock, sand, and
gravel. The Volunteer State is also a chief producer of aluminum.
Manufacturing aids Tennessee’s economy enormously. Processed foods are the top products made in
Tennessee, including beverages such as beer, whiskey, and soft drinks, in addition to candy, meat,
dairy products, and vegetable oil. Tennessee is also a major producer of automobiles, boats, and
aircraft equipment. Tennessee is a leader in chemical production, with important products including
chemicals, paints, pharmaceuticals, resins, and soaps. Other important manufactures are electrical
machinery, textiles and apparel, rubber, and glass items.
By far the greatest contributor to the Volunteer State economy is the services sector. Chief
services include private health care, law firms, motels, business services, wholesale trade, retail
trade, finance, insurance, and real estate.
With Tennessee’s great natural beauty, in addition to numerous musical and cultural attractions,
the Volunteer State prides itself on its growing tourism industry.
In 2005, Tennessee ranked 43rd in the U.S. in median household income at $ 38,874 and 35th in per
capita personal income (PCPI) at $30,969. The average annual growth rate of PCPI between 1995 and
2005 was 3.9 percent, compared to the average annual growth rate for the nation at 4.1 percent. The
Volunteer State boasts a home ownership rate of 72.4 percent. Its unemployment rate is 5.2 percent.
Tennessee levies a sales tax of 7 percent on tangible property, and 6 percent on food and food
ingredients; prescription drugs are exempt. Tennessee is one of the few states with no personal
income tax. Tennessee’s overall cost of living is slightly lower than the national average.
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