The town's economy declined with the importance of the railroad after United States Highway 41A was built in the '40s. The old passenger depot was restored as a museum, and is a focal point of the downtown area. In recent years, the economy has resurged as Cowan has developed into a bedroom community for the University of the South, located in nearby Sewanee, Tennessee
There were 746 households out of which 30.8% had children under the age of 18 living with them, 46.6% were married couples living together, 16.4% had a female householder with no husband present, and 33.0% were non-families. 31.4% of all households were made up of individuals and 14.3% had someone living alone who was 65 years of age or older. The average household size was 2.36 and the average family size was 2.95.
In the city the population was spread out with 24.7% under the age of 18, 8.5% from 18 to 24, 25.6% from 25 to 44, 22.7% from 45 to 64, and 18.5% who were 65 years of age or older. The median age was 39 years. For every 100 females there were 86.3 males. For every 100 females age 18 and over, there were 84.2 males.
The median income for a household in the city was $27,448, and the median income for a family was $33,882. Males had a median income of $27,321 versus $20,909 for females. The per capita income for the city was $18,352. About 13.4% of families and 16.7% of the population were below the poverty line, including 22.8% of those under the age of 18 and 11.4% of those 65 and older.