Louisville forecast 2011.

• Author: Dufrene, Uric

The national recession officially ended in June 2009, and the middle of 2009 also coincided with the deepest year-over-year job losses locally. Since that time, job losses have subsided, and the Louisville metro area actually saw positive year-over-year job gains for a short time in the middle of 2010. Since then, the nation's economy hit a soft patch, raising concerns of a double-dip recession. The nation will escape a double-dip recession, but the key question for next year is the impact of national growth on the regional economy.

Last year, our outlook for the Louisville metro was slow growth, elevated rates of unemployment and consumer retrenchment. This year, the region will see continued improvement in the regional economy, but will not return to the labor market conditions that existed at the start of the recession. However, compared to last year we will make noticeable progress. There will be a continuation of economic growth and employment. The region's unemployment rate will remain somewhat elevated but with a downward trend. Consumers will continue to show their vigilance, and discretionary spending will continue to take a back seat to frugality.

Labor Markets and Employment

Since December 2007, the official start of the recession, the Louisville metro has lost a total of 37,700 nonfarm payroll jobs (see Figure 1). (1) Job losses over the official recession dates, December 2007 to June 2009, total 32,500. Despite additional job losses following the recession's ending date, the region will begin to see a gradual improvement in local labor markets. For example, job changes since the start of the year are only down 200, which is similar to what happened following the 2001 recession. (2)

[FIGURE 1 OMITTED]

Some of the most severely impacted sectors have been construction, manufacturing, retail, and transportation and warehousing. Losses in the transportation sector have decelerated as the nation's economy continues a soft recovery, and manufacturing did see a halt to the severe job losses that occurred early in the recession. Likewise, losses in both retail and construction have slowed.

Employment growth in these severely impacted sectors will depend on both local and national consumer demand. A surge in consumer demand is suspect, but growth in employment will exceed last year's rates. Recent national reports give more confidence that growth rates in these sectors will be higher than expected and in line with sustainable employment...