2002 Kentucky
Annual Economic Report
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Contents
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The U.S.
Economy in 2001:
"Dr.s Bush and Greenspan you are needed in trauma…" |
| Christopher J. Waller |
| In this article, I review the
performance of the U.S. economy in 2001 and the policy remedies that have been employed to
stabilize the economy. I also present some general thoughts on the post-terrorist economy
and address concerns that the U.S. may be entering a prolonged recession much like Japan
in the 1990’s. I argue that relatively little may change in the behavior of the
overall economy in the post-terrorist era but there may well be permanent changes that
affect our lives in important ways. I also argue that comparisons to Japan are far-fetched
and address the concern that the Federal Reserve is facing a liquidity trap much like the
Bank of Japan. (267 kb)
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| Quarterly
Forecasts for the Kentucky Economy, 2002 - 2004 |
| Eric C. Thompson |
| The Kentucky economy is forecast to grow slowly during most of 2002 as the
national economy recovers from the current recession over the course of the year. Economic
growth is then expected to accelerate late in 2002, and 2003 and 2004. In 2002, real gross
state product in Kentucky is forecast to grow at a 1.8 percent rate, while real total
personal income is forecast to grow by 2.4 percent, total employment by 0.9 percent, and
total population by 0.7 percent.
For the entire 2002 to 2004 period, real gross
state product is forecast to average 2.7 percent growth each year on average, compared to
2.6 percent annual growth for real total personal income, and 1.6 percent annual growth in
employment.
These forecasts for the Kentucky economy are based on baseline
expectations for the national economy as presented in the November 2001 U.S. Economic
Outlook prepared by DRI-WEFA. These baseline forecasts assume a mild recession for the
national economy with output continuing to contract through the first quarter of 2002.
(236 kb)
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| Improving
Earnings per Job:The New Economic Development Challenge in Kentucky |
| Paul Coomes |
| The Kentucky Economic Development
Partnership was created by the state legislature in 1992 to oversee industry recruitment,
incentive programs, and other efforts to improve the standard of living of Kentucky
residents and workers. The national economy was red hot between 1992 and 2000, and our
region performed well, particularly in manufacturing assembly and distribution operations.
The state border cuts through many large economic markets, most notably those of
Cincinnati, Louisville, Evansville-Henderson-Owensboro, Nashville, and Huntington-Ashland.
Consistent with the larger bi-state economic areas, I identify nine regions in Kentucky
and report on their recent relative economic performances. I find solid job, business, and
population growth, especially in the Louisville, Northern Kentucky, and Lexington regions.
However, jobs in all regions still pay on average less than in the United States, and the
gap widened during the decade. The gap is most likely due to the low rate of college
attainment of adults in Kentucky. Preliminary data from the 2000 Census suggest that the
college attainment rate of Kentuckians improved during the nineties, but not as much as it
improved nationally. I discuss some economic development policy issues to address the new
challenges in the state. For example, I suggest that state government institute pay
hurdles in its tax incentive programs, so that companies only qualify if they pay
employees more than the current average pay in each industry and region.
(780kb)
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| Geographic
Patterns of Population and Income Growth Across Kentucky, 1990-2000 |
| Mark C. Berger, Christopher
Bollinger and John Perry |
| We examine population, real income, and
real per-capita income growth across Kentucky counties from 1990 to 2000 (1999 for
income). Kentucky’s population growth was slower than the U.S. average, while its
per-capita income increased slightly relative to the U.S. average over the decade.
However, growth in population, real income, or per-capita income was not uniform
throughout the Commonwealth. We find that the largest population growth occurred in
suburban counties within the Golden Triangle formed by Lexington, Louisville, and
Cincinnati, and in some counties along Interstate highways and parkways. The smallest
population growth occurred in the Appalachian East and in the Western part of the state.
Total real personal income growth followed much the same pattern. On the other hand,
growth in real per-capita personal income did not follow any immediately evident pattern.
Real per-capita personal income around some smaller cities grew fairly rapidly, while
suburban counties had slower per-capita income growth. Overall, while low per-capita
income counties grew slightly faster on average than high per-capita income counties, the
absolute dollar gap actually grew in real terms between 1990 and 1999. (350kb)
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| The
Economic Impact of Coal in Appalachian Kentucky |
| Jonathan M. Roenker |
| In the Appalachian region, particularly
in the mountains of eastern Kentucky, the importance of the coal industry looms large in
most facets of the lives of this region’s citizens. This article examines the current
significance of the coal mining industry in coal producing Appalachian counties in
Kentucky by examining a number of economic indicators. Kentucky coal producing counties,
compared to other coal producing counties in the Appalachian region, are often
particularly more dependent on coal as is revealed by the high percentage of coal mining
earnings and employment relative to total earnings and employment in those counties. This
heavy dependence on the coal industry in Kentucky coal producing counties often leaves
these counties susceptible to changes in the fortunes of the industry. As a result, losses
in coal mining earnings in these counties often leads to increased poverty and dependence
on social welfare programs. In this vein, this article also examines the dependence of
Kentucky coal producing counties on social welfare programs in comparison to other
counties in the Appalachian region. (358kb)
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| E-Commerce,
Online Sales, and the Experiences of Kentucky Businesses in the New Economy |
| Joseph Miller |
The economic importance of e-commerce
has been the focus of widespread debate, much of which has suffered from a paucity of
tangible data. This article helps alleviate this deficit by reporting the results of
recent survey of Kentucky businesses. Over one-quarter of large Kentucky businesses that
responded to the survey indicate that they sell their product or service online, which is
a sizeable increase over past survey years. This growth means that Kentucky firms are now
selling online at a rate comparable to the national average, according to available
estimates. The characteristics of Kentucky firms that sell their products online are
addressed, as is online buying behavior among Kentucky businesses. Finally, firms’
experiences with e-commerce are analyzed, including attributes of their online shoppers
and the effects that online sales have had on revenues and profits.
(222kb)
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