By Will McDermott
What the locals say
Kentucky’s recession rebound has been slow to take root.
The Commonwealth of Kentucky’s recovery from the Great Recession has
been sluggish, even compared to a slow national recovery. Kentucky has had
positive growth in gross domestic product (GDP) in 27 of the 29 quarters since
the end of the recession, according to a 2017 report published by the Center
for Business and Economic Research (CBER) at the University of Kentucky. Its
GDP, however, has only increased 13. 7 percent from second-quarter 2009 to
first-quarter 2016. The U.S. GDP grew 15 percent over that same time frame.
Job growth in the commonwealth known for the Kentucky Derby also has
lagged behind the national average since the end of the recession. In 2016,
for example, U.S. employment growth averaged 1.6 percent, but Kentucky
saw only 1 percent job growth this past year. The CBER report cites declines
in the manufacturing and construction sectors during the first half of 2016 as
contributing to the anemic job growth this past year.
The job-growth problem may be more widespread, however. A quarterly
report published this past January by the Kentucky Governor’s Office for
Economic Analysis, stated that “six of the 11 employment super sectors lost
jobs” in the final quarter of 2016 — the second quarter of Kentucky’s fiscal
year. Mining performed the worst, losing 18. 8 percent of its job base year
The Governor’s report forecasts only a 0.8 percent increase in nonfarm employment for the remaining two quarters of the state’s 2017 fiscal year, which
ends on June 30. Manufacturing employment is projected to increase only
0.3 percent, and both mining and construction employment are expected to
lose employment, compared to the final two quarters of fiscal 2016.
Mining and construction employ less than 5 percent of the state’s nonfarm labor force, however. The largest nongovernment sectors, according to the U.S.
Bureau of Labor Statistics, are trade, transportation and utilities, which as a sector provides more than 400,000 jobs ( 20. 7 percent); and manufacturing, which
employs more than 250,000 Kentuckians, or 13 percent of the labor force.
Both of these sectors are impacted greatly by two of Kentucky’s major industries: automobiles and bourbon. Kentucky ranks fifth in the nation in
automotive-industry employment, and it produces and ages 95 percent of
the world’s bourbon supply, according to two reports by the Urban Studies
Institute at the University of Louisville.
Recent investments in these two industries should help expand employment opportunities and increase the commonwealth’s GDP. The 2015 automotive report cited more than 300 announced projects that would invest
$4.5 billion in Kentucky’s automotive industries. The 2017 distillery report
cites over $600 million in planned capital investments into the industry over
the next five years. n
Home sales and prices
Median home prices across Kentucky remained stagnant from 2012 to
2014, barely changing — $109,999 in 2012 to $110,265 in 2014, according to data from the Kentucky Association of Realtors. The market came
alive in 2015, however, with closed sales increasing 7. 3 percent and the
median sales price rising an astonishing 25. 6 percent, to $138,485. Closed
sales increased another 8 percent in 2016 as the median sales price in the
state reached $141,743.
The median value of a Kentucky home as of April 2016 was $125,375,
according to Neighborhood Scout, a website that uses U.S. Census
and Federal Housing Finance Agency data to calculate local and state
housing-market data. More than 40 percent of all homes in Kentucky are
valued at or below $108,000, according to Neighborhood Scout.
Kentucky Home Sales
Source: Kentucky Association of Realtors
Closed sales Median sales price
Judy A. McGaha
Branch production manager,
Caliber Home Loans
“In addition to new-construction shortages, we’re seeing a
price bubble again for several reasons. Buyers want to act now
as many postponed their purchases for several years. Now the
economy’s improved, and they’re also concerned that interest
rates may go up later in 2017. Some buyers may be overpaying
because of these factors, especially if they’re set on buying a