Kentucky's economic outlook for 2015 is cautiously optimistic, according to presenters at the 26th annual Economic Outlook Conference on Tuesday at Lexington Center.
But the optimism was tempered by some sobering state and national statistics presented at the conference, co-sponsored by the University of Kentucky.
For example, Kentucky's level of labor force participation falls far behind that of the United States, and the state is among the top states for people receiving transfer payments, including disability and unemployment compensation.
For much of Kentucky, the problem is that there aren't enough people working to provide a vibrant economy. In the Ashland, Cumberland and Eastern Kentucky mountain regions, only about 50 percent of adult men work, according to statistics.
Another discouraging factor is an emphasis on promoting job growth by geography or economic sector. Kenneth Troske, Sturgill endowed professor of economics, said the state should adopt policies that promote growth of all companies. Place-based economic development policies are ineffective at promoting economic growth of an entire region, he said. Investments in people — such as increasing the educational attainment of the state's population — provide more of a punch, Troske said.
The Lexington area's economy began recovering from the 2008 recession faster than either Louisville or the Cincinnati area, according to Christopher Bollinger, director of the Center for Business and Economic research at UK.
New employment growth in Lexington will come from people moving into the city, Bollinger said, but that migration will happen only when wages go up.
He described his outlook on the state's economy as "guardedly optimistic." During the last quarter of 2014, the state had an unexpectedly robust quarter in job growth, he said.
The state's economic growth will come outside of signature industries, he said.
"Kentucky is way more than coal, horses and bourbon," he said, and the state's biggest employers are government, health care and manufacturing.
A problem Kentucky and the nation share is that of labor force participation. Jennifer Hunt, an economic analyst at the U.S. Treasury Department, told the group that young men born from 1985 to 1989 just aren't getting jobs at the rate that would be expected, a trend she said may define them through their lives. Women born in the same generation are meeting expectations in the labor force, she said.
Although Kentucky has a concentration of auto manufacturing and auto parts companies, Bollinger cautioned against relying on that manufacturing sector as a source of growth because technology advances reduce the need to add manpower.
"We're not going to see growth in employment in manufacturing, even if we see growth in manufacturing," he said.