economic overview janet kelly urban studies institute university of louisville
TRANSCRIPT
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
