Economy

This week, Kentucky’s labor cabinet announced that the state’s exports are up by 11 percent this year, but some are worried that in the long run, the strong U.S. dollar could squelch demand for Kentucky goods.

There’s been a lot of good news for the Kentucky economy lately: the manufacturing sector added 1,100 jobs in April, Corvette announced an expansion of its factory in Bowling Green and and the unemployment rate fell to 5 percent, the lowest it’s been in 15 years.

However, State Office of Employment and Training Economist Manoj Shanker warns that continued strength of the U.S. dollar makes it difficult for countries to afford Kentucky-made goods.

“What’s helped us really, the reason we’re doing all these exports is because energy costs are low, which means the cost of making goods is lower in Kentucky and in the U.S. but what hurts us is that the dollar is strong so it’s more difficult to export," explains Shanker.

While Kentucky and the U.S. economy have rallied since the Great Recession, Shanker says much of the rest of the world is still struggling to catch up.  This phenomenon has led to a trade deficit in the United States that has grown to $51.4 billion according to the U.S. Commerce Department.

Lisa Autry

A major expansion is in the works at the Bowling Green Corvette Assembly Plant. 

General Motors announced today a $439 million investment for facility upgrades, including a new paint shop.  Construction will begin this summer and take about two years to complete. 

Plant Manager Jeff Lamarche says the investment shows GM’s commitment to the Bowling Green facility.

"It's really clear that GM is not just committing for years ahead, but committing to the community, the plant, and the men and women here in Bowling Green," Lamarche told WKU Public Radio.  "It's basically recognition for the great job everybody's done."

The new paint shop will be 450,000 square feet, almost half the size of the current assembly plant.  The expansion is not expected to create any additional jobs. 

Thursday's announcement follows nearly $135 million invested in the plant over the last four years for the new seventh generation Corvette and the Performance Build Center. 

Last month, GM announced it would invest $5.4 billion in its U.S. facilities over the next three years.

Kentucky officials collected more than $1 billion in state taxes and fees in April for the first time in state history.

State Budget Director Jane Driskell predicted Kentucky will end the budget year on June 30 with a $46.1 million surplus. The state ended last year's budget with a $90 million shortfall.

The state's general fund is made up mostly of state income and sales taxes. Collections grew 23.3 percent compared with April of last year. With just two months left in the fiscal year, Driskell said revenues can fall up to 7.8 percent and the state would still meet its budget forecast.

Kentucky's road fund, however, will likely have an $11.1 million shortfall. Gas tax revenues dropped 12.8 percent in April.

The unemployment rates in all of Kentucky’s 120 counties declined from March 2014 to March 2015, but only a few actually saw an increase in employment over the past few years.

Only 28 Kentucky counties have more people employed in March 2015 than in March 2007, according to a recent analysis by the Kentucky Center for Economic Policy.

Job growth has been concentrated in parts of Kentucky with industries that have enjoyed recoveries in the wake of the recession—namely, healthcare, education and the auto industry, said Jason Bailey, the executive director of KCEP.

“We have a very uneven recovery, a recovery where wealthy parts of the state, places that have more infrastructure, more connections to industries that are growing and recovering are seeing job growth,” Bailey said.

Scott County, near Lexington, saw the largest growth with a 16 percent increase in the number of people employed.

Prices of retail food items in Kentucky fell during the last quarter, the first time since June 2013, in a survey of grocery costs.

The Kentucky Farm Bureau Federation's latest Marketbasket Survey was taken in March. The organization says the average total cost of 40 basic grocery items was $126.22, or 2.3 percent lower than the figure reported in the previous quarter.

The federation said in a news release that the figure is still 4.6 percent higher than the total reported at the same time last year.

The release said five of the six food groups included in the survey reported reductions in average prices. Dairy was the greatest with an average price drop of 7.8 percent. Beef was the only category with an increase.

Governor Beshear is reaching out to company and government officials in three Asian countries this week. The governor was in Singapore Wednesday and heads next to Japan. He and his team also made a stop in Taiwan.

State Cabinet for Economic Development Spokesman Joe Hall says more than 170 Asian owned facilities are already found in Kentucky.

"So, that bond is already there. However, there is more opportunity," Hall adds.  "These economies are growing quickly. These are some of the biggest businesses in the world and when they want to expand, we want them to consider Kentucky."

Over the past five years, Japanese companies alone have made investments in Kentucky facilities totaling more than two billion. That's expected to result in almost six thousand jobs.

Kentucky only has about 40 estates that would benefit this year from repealing the federal estate tax, according to the Center for Budget and Policy Priorities.

U.S. House Republicans are pushing to repeal the tax, which taxes assets left by the deceased at a rate of 40 percent.

The Congressional Budget Office estimates that repealing the tax would reduce revenues by about $269 billion over the next decade.

Kentucky Center for Economic Policy director Jason Bailey said repealing the tax would hurt Kentuckians because of the state’s dependence on federal assistance.

“Kentucky’s economy, our communities, our quality of life really depend on federal resources coming back to us, and when those federal resources are cut because of tax cuts, particularly misguided tax cuts that benefit the super-rich as the estate tax does, that harms the state,” Bailey said.

Estates that are less than $5.43 million for a single person and $10.9 million for married couples are exempted from the tax.

President Obama to visit Louisville on Thursday

Mar 30, 2015
White House

Update: 5:12 am

President Barack Obama will visit Louisville on Thursday for an event on the economy, the White House announced Monday.

The stop at Indatus will be Obama's first visit to Kentucky since 2011 when he went to Fort Campbell near the Tennessee border to greet soldiers returning from Afghanistan.

While Obama has not been in Kentucky for a few years, he has loomed large over the state's politics. Republican U.S. Sen. Mitch McConnell won a landslide victory in November based largely on tying his opponent to Obama. Polls routinely show about 60 percent of Kentucky voters disapprove of Obama as president.

Kentucky will be in the political spotlight again in November with one of the country's few governors' races in what is traditionally an off year for elections.

Industry groups from around the state have filed a lawsuit aimed at stopping Louisville’s minimum wage ordinance from going into effect.

Brent Baughman is an attorney representing the Kentucky Restaurant Association, the Kentucky Retail Federation and Packaging Unlimited.

“Unlike other litigation, this is a pure question of law for a court to decide," Baughman says.

Mackenzie Cantrell, an attorney with the Kentucky Equal Justice Center, said the judge’s decision could have larger implications for state municipalities that are enacting laws that don’t get passed on the state level.

Louisville’s ordinance will increase the minimum wage to $9 dollars over the next three years. The ordinance is still set to kick in July 1.

Governor Steve Beshear is leaving Saturday for an economic development trip to Germany and Sweden.

Beshear's office said Wednesday that the governor has been invited to speak at a symposium in Germany, where he will discuss Kentucky's role in the global auto industry. More than a thousand auto executives from around the world gather for the yearly conference.

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