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SLOWER GROWTH FORECAST FOR U.S.
WHILE KENTUCKY HEATS UP

By Dan Adkins

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Berger noted a recent slowing of the national economy in response to the Federal Reserve's tightening of interest rates since summer 1999.  Inflation continues to be low despite significant increases in oil prices over the previous year.

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Dec. 20, 2000 – (Lexington, Ky.) – The U.S. and Kentucky economies will continue growing during 2001, but at a slower pace than in previous years while possibly seeing slight increases in unemployment.  Meanwhile, the state and nation should enjoy strong growth in personal income.

Those predictions were offered today by Mark Berger and Eric Thompson, economists at the University of Kentucky Center for Business and Economic Research.

Berger, director of the center, which is housed in UK’s Gatton College of Business and Economics, noted a recent slowing of the national economy in response to the Federal Reserve’s tightening of interest rates since summer 1999.  Inflation continues to be low despite significant increases in oil prices over the previous year.

He predicted little activity regarding changes in taxes and spending because of the strong divisions in Congress.

Absent major disruptions in oil supplies or war, the economy “should continue on its upward but slower path,” Berger said.

Thompson, who focuses on the Kentucky economy, forecasts a 3.4 percent growth in the real gross state product – the total value of goods and services produced in the state during 2001, while real total personal income will grow by 3.5 percent.  Employment also should grow, rising by 1.2 percent, while population growth will increase by 0.8 percent.

Kentucky’s economy will see stronger growth in 2002 and 2003, Thompson predicted.  Real gross state product will average 3.7 percent growth each year, with annual growth in real total personal income averaging 3.6 percent.

“Annual employment growth over the three-year period is forecast to average 28,700 jobs each year,” Thompson said.

Thompson said more than half of the job growth will occur in the services industry.  Retail trade should add about 5,900 jobs per year, while manufacturing can expect to lose 2,100 jobs per year.   Coal mining also will continue a trend of several years of losing jobs, with an average loss of 550 jobs per year in 2001, 2002 and 2003.


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