21 May 2021 - Karolina Buczek (WLEX)
LEXINGTON, Ky. (LEX 18) — As Kentucky emerges from the pandemic, the focus is shifting to the state's economic outlook. Gov. Andy Beshear says everything is looking good.
"Nearly every day, we are seeing signs that Kentucky's economy isn't just coming back, it is truly roaring back," Beshear told a crowd in Montgomery County on Thursday.
He backed that claim up with analysis from rating agencies.
"They're pretty much the experts. One said [Wednesday], we're coming back with gusto," said Beshear. "The other said we're having a very strong economic rebound."
"Listen, we're seeing really good news," he added.
The agencies Beshear is referring to are Fitch Ratings and Moody's Analytics.
Earlier this month, Fitch Ratings improved Kentucky's financial outlook to stable. Before, it was negative. The report said the change "reflects Kentucky's solid economic recovery to date from the pandemic trough, and the commonwealth's ability to navigate the ongoing budgetary implications without materially weakening its fiscal resilience."
A new report from Moody's Analytics also had positive news for Kentucky.
"Mass vaccinations will be the driving force behind a sustained recovery in consumer services, while manufacturing will fare well once it gets past some near-term supply disruptions," the report said.
The report also included some negative outlook as well.
"Longer term, demographic headwinds and an over-reliance on manufacturing and low-value-added services will keep economic growth below that of the South and the nation," the report said.
However, both groups report Kentucky's recovery from the pandemic is doing well.
Dr. Michael Clark, the director of the Center for Business and Economic Research at the University of Kentucky, believes the positive outlook in the reports seems to be fairly consistent with what local experts are seeing.
"[The economy] has come back fairly strong," said Clark. "Kentucky's employment numbers are growing a little bit faster generally as we come out of the pandemic than the rest of the nation - just a little bit faster, but we are a little bit ahead of the game there. And that is good news for the state."
Clark points to vaccinations and the removal of restrictions as factors in Kentucky's success. But he notes the state is still below where it was prior to the pandemic. So, he makes it clear that it'll take some time to completely rebound.
"It will still take time. It's not like on June 11th, we're going to return back to normal," said Clark. "There are still a lot of challenges in the economy."
One of the challenges Kentucky faces is a lack of workers.
"We still have a lot of people who are sitting out of the labor force - not looking to go back to work. And there can be a lot of reasons for this," said Clark. "It could be that there are still some health concerns. They may feel like going back to work may expose them to COVID. So, they might be concerned about that. There are many parents who are facing childcare issues. If I go back to work, what am I going to do with my child?"
Clark says supply chain disruptions are also challenging the economy.
"Our spending patterns have really changed," said Clark. "It's been much harder for businesses to understand what consumers are going to want, how much of it they're going to want, and where. So, we've been having a lot of supply chain disruptions."
An example of that is lumber.
"There was an expectation that there wouldn't be a lot of construction. That turned out not to be the case," said Clark. "There was a strong demand for construction, so there wasn't a whole lot of lumber available. So, prices went up."
But overall, Kentucky's economy is doing better than many other parts of the country. Why is that exactly? Clark believes its due to the mix of industries located in Kentucky and the people who live here.
"Individuals in Kentucky maybe have been more willing to resume their activities a little but quicker than others in the rest of the nation," said Clark.
So, the governor is taking this news as a positive and celebrating the success projected for Kentucky.
“Two major rating agencies, the U.S. Treasury Department, Site Selection magazine and our own sales tax receipts show while our economy is prepared to boom, this is just the beginning," said Beshear. "Our economy is open, and we are announcing new, good-paying jobs every week. We must seize this moment to create a better commonwealth with more opportunities for our people in every corner of Kentucky.”