Economic Update: Floyd & Clark vs. IN/KY and Jefferson County

02.12.2010

Local Unemployment Rates

Floyd and Clark counties continue to enjoy an unemployment rate lower than Indiana, Kentucky, and Jefferson County.   The latest data indicate that the December local unemployment rate stood at 8.3%, up from the prior monthly rate 7.7%.     The uptick in the local unemployment rate should not be viewed as a big surprise.   We’ll continue to see the rate bounce around the 8% number through the year, and it is doubtful that it will fall significantly under that 8%. 

Unemployment Claims

Unemployment claims for Floyd and Clark appear to have reached a post recession trough.   New and continuing claims for both counties have moved past the trough, and have been on a slight upward trend since September however.    It is becoming apparent that the level of both new and continuing claims appears to be settling at a level higher than that existed prior to the recessionary peak.  Even though we have seen a slight upturn in recent claims, I do not expect this trend to continue.    The higher post-peak level, however, is consistent with the elevated rates of unemployment discussed previously.

Inventory Levels

In an earlier One Weekly column we talked about the relationship between Louisville area manufacturing and the national inventory to sales ratio.    At that time the inventory to sales ratio had apparently reached a peak, and we suggested that manufacturing losses in Louisville would begin to decelerate as a result.    As you can see from the graph below, the inventory to sales ratio has declined considerably from last year.    These lower inventory levels are causing manufacturers to ramp up production, and this explains the deceleration in manufacturing losses.

Source:  U.S. Census

The graph below shows the improvement in the region’s manufacturing employment.    The region hit year over year losses of 10,000 mid-year, and has climbed back to under 3,000.   We can expect continued deceleration in manufacturing losses, and eventual gains.  The headwinds against significant gains however are significant increases in productivity during the current recession and sustained consumer demand following this inventory restocking phase. 

One of the reasons why I continue to question the capacity of the consumer to sustain this demand is linked to consumer debt.   Last week, the Federal Reserve reported that consumer debt fell again as households continue to reduce leverage, thus potentially impacting industries that are sensitive to consumer debt.

Source:  barrons.com

Suggestions

If you have any suggestions on future columns or research about specific industries or other economic data, please send me an email at udufrene@ius.edu.

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This information is provided by

Uric Dufrene. 

Uric Dufrene, Ph.D. holds the Sanders Chair in Business in theSchool of Business at Indiana University Southeast.  He conducts research on local and regional economic trends, and teaches corporate finance at the undergraduate and graduate levels.   He previously served as dean of the School of Business.