Timothy Goines, left, has help from Adrian Craighead while looking for jobs on the computer at the Tennessee Employment Service Office at Eastgate Center in Brainerd in this file photo.

The number of employed Tennesseans rose slightly in August, though economists downgraded the state's economic outlook in light of projections that point to high levels of long-term unemployment.

A report released Thursday by the University of Tennessee projects that both state and national joblessness will linger above 9 percent until 2013, and the state's rate "will surpass the national unemployment rate through the short-term forecast horizon," said economist Matt Murray, associate director for the UT Center for Business and Economic Research.

August unemployment in Tennessee fell to 9.7 percent, down from 9.8 percent in July and well above national unemployment, which remained unchanged for the month at 9.1 percent. The Chattanooga area continues to remain a bright spot despite statewide problems, though unemployment in the metropolitan area ticked up in August, according to the Tennessee Department of Labor and Workforce Development.

Chattanooga's metro unemployment rate clocked in at 8.8 percent in August, up two-tenths of a percent from July.

Knoxville had the lowest unemployment of any other major metro area in Tennessee, at just 7.9 percent, while Union City had the highest, 17.2 percent.

Dems Study Solutions

State Democrats toured Chattanooga on Thursday, part of a "listening tour" to learn more about the plight of Tennessee's employers.

"We've spoken to small business people about their concerns," said state Rep. Craig Fitzhugh. "If we can speed the process of getting jobs in our state, we will do that."

Senator Andy Berke (D-Chattanooga) speaks at a town hall meeting in Chattanooga, Tenn., in this file photo.

But government doesn't always have the answer, cautioned state Sen. Andy Berke, tamping down expectations for a politically driven silver bullet.

Though Berke has proposed legislation to reward entrepreneurs with tax credits and help businessmen get loans, he acknowledged that legislators have kept an eye on businesses regulatory burden as well.

"We've certainly been working to reduce unnecessary regulation and give people the opportunity to succeed," Berke said. "But ultimately what's going to get our employment to go up is to find the economic sectors that are going to grow in the future."

One such sector is the green, or sustainable products industry, which Rep. JoAnne Favors sees as critical to the state's recovery.

JoAnne Favors stands in the Times Free Press photo studio during a portrait session. Photo taken Jan. 16, 2009.

"Most jobs lost in the U.S. will not be recovered, so we have to go in a new direction," Favors said after a presentation by David Crockett, director of Chattanooga's Office of Sustainability.

Crockett compares creating jobs to duck hunting, in which "the solution is to figure out where the duck's going, and shoot ahead of it."

The Lost Decade

As leaders struggle for answers, national unemployment has not only stayed stuck above pre-recession levels, but has exceeded jobless numbers dating back to 2000, Murray said.

"Economic growth has slowed but has not stalled," Murray wrote. "The outlook for 2012 is only slightly better."

Tennessee's business outlook is mixed, as manufacturing and local government jobs will continue to flounder as other sectors of the economy, excluding retail, gain jobs, according to the state-financed report.

The housing market is expected to continue its decline through 2011, as existing home sales remain low and national home prices drop 5.2 percent through the year.

The "downward pressure" on property taxes due to increased foreclosures and general softness in the market will create revenue problems for local governments, as well as for the construction, building material and home furnishing sectors, according to the report.

That's bad news for Chattanooga State Community College student Wendy Curtis, who said the current economy "makes me feel sad."

"At all levels, there needs to be a change," she said.

Two of her peers, including future electrical engineer Zach Klassen and future physical therapist Christina Harris, worry about their job prospects.

"It's kind of stressful, because you see all these people getting laid off, so you've got to figure out how to study something that's recession-proof," Harris said.

Klassen echoed her negative assessment of the job market, though his spirits are buoyed by the increasing local demand for engineers such as himself.

"I feel like I'm going to have trouble because there's definitely competition for jobs," he said. "But at least I'm an engineer."

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