Eric Thompson and Christopher Waller discuss their
forecasts for the state and national economies in
said Kentucky will add about 36,500 jobs in each of
the next three years. In the period from 2003 through
2005, nearly half of the job growth will be in the
services industry, while retail trade will add 4,500
per year. The manufacturing sector will grow by 4,700
jobs per year.
grain outlook is optimistic for 2003
aquaculture industry expects continued growth in 2003
Lexington, Ky. (Dec. 6, 2002) -- Kentucky will experience an economic rebound
in 2003, with total personal income growing by 5.4
percent, a University of Kentucky economist forecasts.
The growth of income will feel like a 2.6 percent
increase when the effect of inflation is factored,
said Eric Thompson, acting director of the UK Center
for Economic Research in the UK Gatton College of
Business and Economics.
Thompson said Kentucky will add about 36,500 jobs
in each of the next three years. In the period from
2003 through 2005, nearly half of the job growth will
be in the services industry, while retail trade will
add 4,500 per year. The manufacturing sector will
grow by 4,700 jobs per year. The coal industry will
continue to shrink, with an average annual loss of
500 jobs over the next three years.
After rebounding in 2003, the state's economy will
accelerate again in 2004 and moderate in 2005, Thompson
Meanwhile, the U.S. economy may face its second recession
in three years in 2003, and the federal government's
options may be limited, said Christopher Waller, the
Gatton Endowed Professor in Macroeconomics and Monetary
Economics in the Gatton College.
Waller said a decline in industrial production and
capacity utilization in 2002's fourth quarter offers
reason for concern.
Waller said a recession could be triggered by several
factors ranging from war with Iraq to a major terrorist
attack on U.S. soil and the damage to consumer confidence
that such an attack would cause.
The Federal Reserve already has lowered interest
rates to a point that further reduction would be difficult,
Waller said. The Federal Reserve also would need to
act cautiously to avoid sending a signal of desperation
to the markets, he added.
One response to a recession would be a tax cut that
would spur consumer spending, but Waller noted these
cuts probably would result in a federal deficit that
would add to the national debt.
Waller pointed out the national debt had been trimmed
during the 1990s, which will ease the impact of increasing
He also said a war with Iraq probably would be short
and therefore not cause too much economic uncertainty.