2004 Kentucky Annual Economic Report 

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Contents

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The Kentucky economy is forecast to follow the national economy into a period of strong post-recession growth in 2004, and solid growth in 2005 and 2006. With strong growth, Kentucky employment is expected to reach pre-recession levels by mid-2005. However, recession period job losses in manufacturing are expected to be permanent. Unemployment rates will fall slowly over the next three years.

     (79 kb)

Kentucky changes daily in a variety of ways. One manner in which Kentucky changes is through its population changing residencies. Each year, a number of Kentucky citizens move out of the state while other people move into the state. In addition, many people stay in Kentucky but move to a different geographic region within Kentucky. While being able to move is generally considered a positive circumstance, allowing people to relocate to where they perceive their best opportunity, this movement could have important implications on both the localities people are moving to and moving from. Knowing ‘who’ is moving could be useful in understanding relative strengths and weaknesses as perceived by individuals and families. Using recently released migration data from the 2000 Census, the movement of people into and out of Kentucky, as well as movement within Kentucky’s boundaries, from 1995 to 2000 is investigated. This article provides an overview of some general demographic characteristics of the movers.

     (306 kb)

Producer Services can become a base for the Kentucky economy in future years since the industries sell their services throughout the nation, pay relatively high wages, and are growing rapidly. These industries, however, account for a significantly smaller share of employment in Kentucky than the nation. This result is predictable given that Kentucky has a larger non-metropolitan population than the nation, and smaller metropolitan areas, but growth of these industries represents a significant future opportunity for the state.

         (51 kb)

The U.S. Census Bureau’s estimates of e-commerce sales reached $12.5 billion in the second quarter of 2003; a 27.6% increase over the second quarter of 2002; proof that e-commerce sales are still burgeoning despite the relatively slow economy. This article provides state-level data concerning electronic commerce for Kentucky from a recent survey conducted by the University of Kentucky Center for Business and Economic Research. Survey results indicate that while the percentage of small businesses in the state using the Internet to conduct online sales bounced back from the dip seen in the previous year’s survey, the percentage of large businesses conducting online sales actually shrank from the previous year. Based on the results of the survey, 20.6% of large Kentucky businesses and 12.7% of small Kentucky businesses are involved in e-commerce. The characteristics of Kentucky firms currently selling online are considered as is these firms’ experiences with e-commerce. Finally, the effects of online sales on sales and revenue of Kentucky firms are addressed.

   (66 kb)

Tax credit programs to encourage the rehabilitation of historic properties have become an increasingly popular policy tool for states across the country. Such a program in Kentucky would attract between 70 to 175 homeowners as participants in a typical year with participation concentrated in the urban area of the state. As a tax incentive program, an historic rehabilitation tax credit should generate additional economic activity and tax revenue that would mitigate some of the fiscal costs of the program. The level of mitigation depends on what percentage of program participants conduct the rehabilitation specifically in response to the tax credit.

     (163 kb)