Tennessee Unemployment Dips to 3.5%, Beats U.S. Average in Early 2026

NASHVILLE, Tenn. — Tennessee's economy showed resilience into 2026, with the state's seasonally adjusted unemployment rate falling to 3.5% in January, down one-tenth of a percentage point from December 2025.[2][4] That figure beat the U.S. rate of 4.3% and marked stability after a year where rates hovered between 3.5% and 3.7% throughout 2025.[2][6] Total nonfarm employment grew by 7,200 jobs over the month, with the biggest gains in private education and health services, professional and business services, and financial activities.[2] By February, the rate edged up slightly to 3.6%, still eight-tenths below the national 4.4%.[1][3] Over the past year, employers added 5,900 nonfarm jobs through January, led by health care and social assistance, state government, and arts, entertainment, and recreation.[2] However, February saw a net loss of 9,200 jobs, primarily in private education and health services, trade, transportation, and utilities, and leisure and hospitality.[3] Local variation underscored Tennessee's patchwork prosperity. In January, 84 of 95 counties reported rates below 5%, with Williamson County at a low 2.7%, followed by Cheatham and Wilson at 2.8% each.[4] Knox County clocked in at 2.9%, while rural Perry County topped the list at 11.3%.[4] Officials from the Tennessee Department of Labor and Workforce Development hailed the trends as evidence of the state's edge over national benchmarks.[1][4]