Kentucky's economy: Is there reason for optimism?

FRANKFORT — The future of Kentucky's economy is "optimistically uncertain," a state economist Wednesday told a panel that is trying to predict how much money the state will have for its next two-year budget.

Greg Harkenrider, deputy executive director of the Governor's Office for Economic Analysis, told the non-partisan Consensus Forecasting Group that there seems to be some consensus among economists for a more robust economic recovery but "uncertainty continues to muddy the waters."

He noted uncertainty with the markets and cautious hiring, investment decisions and household decisions.

He said the "golden boy" in the economy may be housing. "Housing led us into the recession and it may lead us out of it."

Harkenrider and other state economists presented to the eight-member panel of independent economists a wide array of economic data to help it at its next meeting — Aug. 15 — to come up with revenue estimates for the next four years.

In October, it will make preliminary revenue estimates for the next two-year budget that state lawmakers will craft in the 2014 General Assembly that begins in January. The forecasting group's final estimates will be made in December.

The group and state economists have a good track record.

In December 2011, state revenue projections were made during considerable economic uncertainty and the potential for a double-dip recession.

Yet, revenue estimates for fiscal year 2012 and fiscal year 2013 have been within a 1 percent error range.

For fiscal year 2013 that ended June 30, receipts for the state's General Fund, which pays for most state programs, totaled more than $9.3 billion.

Before listening to the state economists, the Consensus Forecasting Group elected Eastern Kentucky University economics professor Frank O'Connor as its new chairman. He replaces Transylvania University economics professor Larry Lynch, who retired in June 2012. Lynch had been the group's chairman since 1994.