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The “State” of the State Economy Dr. James Ramsey President, University of Louisville

The “State” of the State Economy Dr. James Ramsey President, University of Louisville. NOVEMBER 7, 2013. Thank you for this opportunity. We value our partnerships with the Owensboro community. I have a job ... But my passion ... Today.

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The “State” of the State Economy Dr. James Ramsey President, University of Louisville

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  1. The “State” of the State Economy Dr. James RamseyPresident, University of Louisville NOVEMBER 7, 2013

  2. Thank you for this opportunity We value our partnerships with the Owensboro community

  3. I have a job ... But my passion ... Today

  4. I don’t get to teach economics anymore, but I did find my notes from Econ 202 My notes from Econ 202

  5. In “Macro” we talk about exciting topics: GDP Full employment Inflation All that stuff … The Business Cycle

  6. While I was trained as an econometrician Today let me make some casualobservations on: National economy Kentucky economy State budget Higher education

  7. (With apologies to a Dallas Federal Reserve Economist who I heard 14 years ago) The Business Cycle Still Exists! Observation I

  8. The “recession!” The Last Decade or so Quarterly Change in GDP (measure of macro economic activity)

  9. We know that nationally times have been unprecedented…11 post WWII recessions • *Lowest level during the current recession. The next two quarters (2009: III and IV) have been positive. • http://books.google.com/books?id=g-L0iLH5u34C&pg=PA408&lpg=PA408&dq=Real+GDP+November+1948&source=bl&ots=1eT_Am6PKI&sig=hkYMPbaa6BWiE92o-tg8Z8DPBI4&hl=en&sa=X&ei=2gEJUrDyE-Hg2AX384DYDQ&ved=0CDcQ6AEwAQ#v=onepage&q=Real%20GDP%20November%201948&f=false

  10. Just when we thought recovery was taking hold Observation II 2011 “Black Swans” Tsunamis/Nuclear MeltdownJapan Civic unrest Tunisia/Egypt/Libya/Yemen/etc. Europe Economic Meltdown Greece/Spain/etc. 2012 “Sandy” Sequestration 2013 And now shutdown So, we are recovering – but we are not back! Yet.

  11. The real problem! Observation III

  12. Slow recovery continued – September 2013

  13. National Employment 5.787 million Jobs lost in the recession US jobs December 2007 US jobs September 2013 137,982,000 136,290,000 Jobs gained in the recovery 7.479 million Still 1.69m fewer people working today http://beta.bls.gov/dataViewer/view/timeseries/CES0000000001http://www.deptofnumbers.com/employment/us/

  14. Observation IV We live in a: New Economy/Knowledge Based Economy (Human Capital most important input into production process) Global Economy (What happens…)

  15. The New Economy

  16. Jobs of Today … Jobs of Tomorrow … Education Is …

  17. September 2013 % Observation V Education is Important! % % % % U.S. National Unemployment Less than H.S. Diploma H.S. graduate, no college Some college or Associates BA or Higher 17 http://www.bls.gov/web/empsit/cpseea05.htm

  18. OK, so I am still awake (barely) But… What’s The Point Of All This

  19. Oh – so let’s talk about KYKentucky’s Economy is Dependent on National Economy

  20. Kentucky’s Economy “A Quick History”

  21. August 2013 Beginning in 2000Kentuckians working

  22. September 2013 Just a little comparison

  23. But there is more to it Kentucky Manufacturing Employment August 2013 Why Important? WAGES!

  24. So, in Kentucky things are better but we are not back yet from the depths of recession

  25. “I am trying to hang with you but work with me … What’s all this mean?”

  26. State Funded? OR State assisted? The Kentucky “General Fund” FY 13 Income Tax/Sales Tax highly correlated with economic activity — i.e. Employment! People working!

  27. KY General Fund Legislative (budget) Session Recessionary years Modest recovery * Forecasted http://www.osbd.ky.gov/NR/rdonlyres/1ADF4A09-F159-40BE-9DD0-2156ACCD0276/0/1214BOCBudInBrief.pdf

  28. So, While Modest Economic Recovery, State Budget (2008-14) Continues To Be Ugly Because of Expenditure Side of Budget http://www.ksba.org/protected/PrintArticle.aspx?iid=50GAYB&dasi=3UBI

  29. Um – Not Good, is it Well – no one knows, but my guess is “OK” recovery will continue in Kentucky KY will continue to add jobs, but … probably late 2014 before we return to job level of late 2007 Jobs of the future continue to be different than jobs of the past “Pockets” of problems — e.g. Eastern KY But what does the future hold for Higher Education in 2014 Biennial Budget Session

  30. Continue to face difficult state and fiscal challenges that impact our future Slow State General Fund revenue growth (estimate 2013-14 is 2.5%, FY14-15: 2.4%, FY15-16: 2.3%) State’s structural budget imbalance still exists (more funding needed for state pensions) And, We Will: http://www.kypolicy.us/content/revenue-forecast-next-budget-remains-weak

  31. Other Expenditure areas of budget will be higher priority than higher education – because questions of: Is Higher Education accountable? Is Higher Education effective? Higher Education hasn’t sold itself Higher Education has alternative revenue sources And:

  32. Limited / if any funding for higher education Funding, if available, tied to “performance” Funds, if available, tied to specific initiatives; i.e. “college readiness” Continued pressure on modest tuition increases What this means Tough Fiscal Outlook to Continue 2014 - 2016

  33. So!

  34. Thank you Questions?

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