The first quarterly Economic Recovery report was recently released to inform the public and lawmakers as they shape the policy necessary to move the economy forward.
Although the state’s economy has rebounded over the last few months, there is still work to be done. With COVID-19 vaccinations becoming more readily available, Kentucky Chamber leaders said economic recovery must remain a priority.
Defining recovery priorities
A big focus for the Kentucky Chamber as it looks ahead is prioritizing the labor force participation rate (the percentage of citizens actively engaged in employment or actively searching for work). Kentucky’s labor force participation rate 57% in December 2020, down from 59.6% just before the pandemic began.
Kentucky has the 6th lowest labor force participation rate among all 50 states, which suggests that the unemployment rate is not accurately reflective of the state’s current unemployment situation.
Kentucky lost just over 326,000 jobs at the start of the pandemic. Economic output plummeted. Schools closed.
As restrictions lessened and more businesses reopened, hiring began again. As of December 2020, Kentucky has now recovered 65% of the jobs lost at the beginning of the pandemic. Kentucky’s Gross Domestic Product (GDP) increased in the third quarter at a record rate since the start of the pandemic at 41.2%. While this is still below pre-pandemic levels, it proves the needle is moving forward.
While many of Kentucky’s exports saw declines, computer and electronic products and primary metal manufacturing increased in 2020, likely due to the increased need for technology while much of the workforce remained at home.
Identifying growing industries
While many industries have experienced significant employment losses, construction is the one sector that grew as of December 2020. Kentucky construction employment is up 3% from last year.
Kentucky Chamber leaders said this was likely driven by the increased demand for remodeling and new housing. Kentucky’s construction sector has outperformed the U.S. and surrounding states.
Not surprisingly then is the increased pressure placed on Kentucky’s housing market. Supply has not been able to keep up with the demand for more space as families spend more time at home. The report said families have been reluctant to list their homes likely due to the uncertainty of the pandemic and recession that it has also affected the limited supply.
The high demand has driven housing prices up and reduced the length of time houses are on the market. In one year, the average length of time a house remains on the market has decreased from 81 to 62 days in Kentucky.
As vaccine rollout continues, consumer confidence will be an important part of the Commonwealth’s future success. The Kentucky business community is strong, and it is resilient, Kentucky Chamber leaders said.
See the full report
To view the full Kentucky Economic Recovery Report from February 2021, click here.