economic overview janet kelly urban studies institute university of louisville

ECONOMIC OVERVIEW

Janet KellyUrban Studies InstituteUniversity of Louisville

Recovery

• Every four to six years we experience an economic slowdown– The current bull market is in its fourth year

• CBO predicts real GDP growth at about 2.5%• Business profits up over 7% from a year ago• Auto sales and homebuilding leading the

expansion• Unemployment will remain near 8%

2008 2009 2010 2011 2012$20,000

$25,000

$30,000

$35,000

$40,000

$45,000

Per Capita Real GDP 2009-2012

United States

Kentucky

Louisville MSA

Regional economy just beginning to outpace national economy; state outlook gloomy

Source: Bureau of Economic Analysis

20022003200420052006200720082009201020112012

$- $5,000

$10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 $45,000 $50,000

Louisville MSA GDP* 2002-2012

Source: BEA*in current dollars

Private service providing

Private goods producing

Government

Unemployment in the Louisville Economy

• New USI research report– usi.louisville.edu

• Structural factors– Substitute technology for workers– Skills mismatch

• Cyclical factors– Stimulus too timid• Aggregate demand remains sluggish

2008 2009 2010 2011 2012 2013 to Date

4%

5%

6%

7%

8%

9%

10%

11%

Unemployment Rates 2008-2013

NationKentuckyLouisville MSAJefferson County

Labor Market Distortions - Demand

• Persistent high unemployment may lead employers to believe it is a “buyer’s market”

• Seek perfect worker• Inflate qualifications • Offer below market wage rates• Discriminate against long term unemployed– Evidence that unemployed over six months

significantly reduces likelihood of being hired

Labor Market Distortions - Supply

• Unemployed workers may have unrealistic expectations about achieving the same wages they enjoyed prior to the recession

• Extension of unemployment benefits and expansion of assistance programs raised the reservation wage– Job search delayed until recovery– Months waiting reduced attractiveness to

employers• House lock, making relocation difficult

In Labor Force Employed

Unemployment Rate

AGE

16 to 19 years 42.60% 31.40% 26.40%

20 to 24 years 80.90% 69.90% 13.10%

25 to 44 years 85.10% 76.80% 9.40%

45 to 54 years 79.80% 72.80% 8.70%

55 to 64 years 63.30% 59.30% 6.30%

65 to 74 years 27.20% 26.10% 4.20%

75 years and over 5.50% 5.00% 8.30%

2012 Jefferson County Employment by Age

In Labor Force Employed

Unemployment Rate

White 66.10% 60.90% 7.70% Black or African American 63.90% 52.90% 16.90%

Asian 69.10% 66.20% 4.10%

Two or more races 68.60% 56.70% 15.40%

Hispanic or Latino 78.80% 66.80% 14.20%White, not Hispanic or Latino 65.60% 60.60% 7.40%

2012 Jefferson County Employment by Race and/or Ethnicity

Source: ACS 1 Year Estimates, US Census Bureau

In Labor Force Employed

Unemployment Rate

Population 25 to 64 years 78.50% 71.60% 8.60%

Less than high school graduate 52.90% 42.20% 20.40%

High school graduate (GED) 74.60% 64.30% 13.80%

Some college or associate's degree 80.50% 73.50% 8.30%

Bachelor's degree or higher 86.50% 83.40% 3.30%

2012 Jefferson County Employment by Educational Attainment

Education LevelJefferson County

Louisville MSA Kentucky USA

Less than high school graduate 20.4% 18.8% 15.0% 14.2%

High school graduate (GED) 13.8% 10.4% 9.2% 10.1%

Some college or associate's degree 8.3% 7.5% 7.9% 8.0%

Bachelor's degree or higher 3.3% 3.4% 3.2% 4.2%

2012 Unemployment by Educational Attainment

Source: ACS 1 Year Estimates, US Census Bureau

Concluding Thoughts

• Unemployment is not a number– Age, race and educational attainment shows the

difference• Education gap affects prosperity now– More jobs than workers with a Bachelor's degree

or higher– More workers than jobs in all lesser education

categories• Education gap will drive local economy

THANK YOU

janet.kelly@louisville.edu

502-852-2435