KENTUCKY’S ECONOMY

Pre-Learning Quiz

1. What is capitalism?2. What is a “free-market economy”?3. How important is agriculture in

Kentucky, and what do we mostly raise / grow?

4. How important is manufacturing, and what do we in Kentucky produce / make?

5. How has Kentucky’s economy changed over the years?

Important Economic Terms

Capitalism: an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market

Free Market Economy: an economic market or system in which prices are based on competition among private businesses and not controlled by a government

Per Capita Income: income of each person

Gross Product: the total value of the goods and services produced during a year, not including the value of income earned in foreign countries (Gross Domestic Product / Gross State Product)

Economics

People make choices about how to use limited resources, decide the ownership of resources, and structure markets for the distribution of goods and services.

Economics

What are the basic characteristics of free market, command, and mixed economies?

www.adamsmith.org

Economics

Characteristics of major economic systems

Free market Private ownership of

property/resources Profit Competition Consumer sovereignty Individual choice

Economics

Characteristics of major economic systems

Command economy Central ownership of

property/resources Centrally-planned economy Lack of consumer choice

Economics

Characteristics of major economic systems

Mixed economy Individuals and businesses as decision makers

for the private sector Government as decision maker for the public

sector A greater government role than in a free

market economy Most common economic system today

Economics

The United States economy is a mixed economy .

In the United States private individuals, businesses, and government share economic decision making

Economics

What are the essential characteristics of the United States economy?

Economics

Characteristics of the United States economy

Free markets—Markets are allowed to operate without undue interference from the government.

Private property—Individuals and businesses have the right to own personal property as well as the means of production without undue interference from the government

Economics

Characteristics of the United States economy Profit—Profit consists of earnings after all expenses have been paid.

Competition—Rivalry between producers/sellers of a good or service results in better quality goods and services at a lower price.

Consumer sovereignty—Consumers determine through purchases, what goods and services will be produced.

You tube-

BLUEGRASS AIRPORT

Kentucky’s Economy: Current Trends and Future Realities(parts 1-2)

Class Activity

Write a paragraph describing the economic system of the United States, summarizing

it as briefly – yet completely – as possible,

including information about capitalism, free-market, profit, and competition.

Overview

Between statehood and the Civil War, Kentucky was one of the preeminent agricultural states, partly because of good access to river transportation down the Ohio and the Mississippi to southern markets. Coal mining had become an important part of the economy by the late 19th century.

Overview

Although agriculture is still important in Kentucky, manufacturing has grown rapidly since World War II and was, by the mid-1980s, the most important sector of the economy as a source of both employment and personal income. Kentucky leads the nation in the production of bituminous coal and whiskey (distilling half of the nation's total in 1996), and ranks 2nd in tobacco output.

Overview

Early in its history Kentucky gained recognition for its excellent farming conditions. It was the site of the first commercial winery in the United States (started in present day Jessamine County in 1799) and due to the high calcium content of the soil in the Bluegrass region quickly became a major horse breeding (and later racing) area. Today Kentucky ranks 5th nationally in goat farming, 8th in beef cattle production,[60] and 14th in corn production.[61]

Overview

Today Kentucky's economy has expanded to importance in non agricultural terms as well, especially in auto manufacturing, energy fuel production, and medical facilities. As of 2010 24% of electricity produced in the USA depended on either enriched uranium rods coming from the Paducah Gaseous Diffusion Plant (the only domestic site of low grade uranium enrichment), or from the 107,336 tons of coal extracted from the state's two coal fields

Overview

Kentucky ranks 4th among U.S. states in the number of automobiles and trucks assembled. The Chevrolet Corvette, Cadillac XLR(2004–2009), Ford Escape,  Ford Super Duty trucks, Ford Expedition, Lincoln Navigator, Toyota Camry, Toyota Avalon, Toyota Solara, and Toyota Venza are assembled in Kentucky.

In May 2010, the Army Human Resource Center of Excellence, the largest office building in the state at nearly 900,000-square-feet, opened at Fort Knox, employing nearly 4,300 soldiers and civilians

Kentucky Business

The best selling car in the United States, the Toyota Camry, is manufactured in Georgetown, Kentucky

Kentucky Business

The best selling truck in the United States, the Ford F-Series, is manufactured in Louisville, Kentucky

Top 10 Industries in KY

(in millions of dollars) Motor Vehicles and Equipment   $10,255Health Services   $8,064Business Services $3,599Food and Kindred Products        2,718Electric, Gas, and Sanitary Services  $2,551Transportation by Air   $2,351Industrial Machinery and Equipment $2,274Chemicals and Allied Products $1,964Trucking and Warehousing$1,944Fabricated Metal Products  $1,891  Source: U.S. Census Bureau

Statistics

The total gross state product for 2010 was $163.3 billion, 28th in the nation. Its per-capita personal income was US$28,513, 43rd in the nation.

As of July 2012, the state's unemployment rate is 8.3%.

Class Activity

KENTUCKY’S ECONOMY: SUMMARYWrite a paragraph summarizing Kentucky’s economy, including products, manufacturing,

and specific products grown or made in Kentucky.

Also, answer these questions:1. What makes Kentucky’s economy STRONG?

2. What could make our economy BETTER?3. What JOB do you see yourself doing in 10

years, and what do you have to do to prepare for it?

Taxation

There are 6 income tax brackets, ranging from 2% to 6% of personal income. The sales tax rate in Kentucky is 6%. Kentucky has a broadly based classified property tax system. All classes of property, unless exempted by the Constitution, are taxed by the state, although at widely varying rates.

Taxation

Real property is assessed on 100% of the fair market value and property taxes are due by December 31.

Once the primary source of state and local government revenue, property taxes now account for only about 6% of the Kentucky's annual General Fund revenues

Taxation

Until January 1, 2006, Kentucky imposed a tax on intangible personal property held by a taxpayer on January 1 of each year. The Kentucky intangible tax was repealed under House Bill 272. Intangible property consisted of any property or investment , such as bonds, notes, accounts receivable, trusts, enforceable contracts sale of real estate (land contracts), money in hand, money in safe deposit boxes, annuities, interests in estates, etc.

Kentucky Taxes

Rev.ky.gov

FORMS, INFORMATION, ETC.

Then & Now

Kentucky is an important center of manufacturing, agriculture, and mining. Until the 20th century, farming was the state’s main economic activity. As a result of abundant coal and hydroelectric power, manufacturing grew in importance after the 1930s. Today, manufacturing is Kentucky’s major economic activity, followed by service industries.   

Agriculture

Kentucky remains one of the nation’s major agricultural states. Tobacco is the leading source of crop income. Kentucky ranks second among the states, after North Carolina, in the production of tobacco. The state’s other major cash crops are corn, soybeans, and hay.

Agriculture

Kentucky’s farmers also raise livestock—cattle and horses. The breeding and selling of thoroughbred horses is Kentucky’s most valuable source of livestock income. Most of the thoroughbred horses come from the bluegrass pastures that are located near Lexington.

KY’s Top 10 Leading Crops

Total (in millions) Hay $500.4 Tobacco $456.1 Soybeans $405.2 Corn $377.3 Wheat $66.5 Sorghum $7.5 Apples $2.3 Barley $1.1 Peaches $1.0Source: National Agricultural Statistics Service

KY’s Land usage

Pastureland    23%Cropland  21%Other Land 3%Federal Land  5%Developed Land  7%Forest Land  41%

Coal

Kentucky is a leading coal-producing state. Coal is mined in Kentucky’s eastern Appalachian counties and in western Kentucky.

About 60 percent of Kentucky’s coal comes from underground mines, the rest from surface mines. Coal-burning plants produce about 97 percent of Kentucky’s electric power. Hydroelectric utilities, such as Barkley and Kentucky dams, produce most of the rest. 

Coal

Kentucky

Coal-miners-in-kentucky.com

Benhamky.org

Manufacturing

Manufacturing and service industries are Kentucky’s most important economic activities. Most industries are located in Louisville, Lexington, and northern Kentucky. The production of transportation equipment, such as motor vehicles, is Kentucky’s leading manufacturing activity. Chemicals rank second among the state’s manufactured products.

Service Industries

Major service industries are related to government, finance, health care, tourism, and wholesale and retail trade.  

Employment

KY’s Employment by IndustrySource: Current Employment Statistics  © 2005 Office of Employment

and Training An Official Commonwealth of Kentucky Web Site.  Agriculture, forestry, fishing, hunting, and mining 59,729 (3.3%) Construction 129,618 (7.2%) Manufacturing 315,774 (17.6%) Wholesale trade 60,854 (3.4%) Retail trade 217,164 (12.1%) Transportation and warehousing, utilities 108,738 (6.0%) Information 39,303 (2.2%) Finance, insurance, real estate, and rental and leasing 97,350

(5.4%) Professional, scientific, and business services 111,878 (6.2%) Education, health, and social services 365,605 (20.3%) Leisure and hospitality 129,973 (7.2%) Public administration 77,128 (4.3%) Other services 85,150 (4.3%)

Kentucky Exports

In recent decades, Kentucky’s role in the global economy has steadily risen. In 2004, Kentucky’s exports totaled nearly $13 billion. About 18 percent of all manufacturing workers in Kentucky depend on exports for their jobs. Kentucky now ranks 19th among the 50 states and the District of Columbia in its amount of exports.

Kentucky Exports

Manufactured goods account for nearly 96.1% ($12.5 billion) of Kentucky’s exports. Agriculture accounts for 2.2% ($277 million), and minerals and ores account for less than 1% ($28.4 million.) Transportation equipment ranked as Kentucky’s top export in 2004. Other top exports were chemicals, machinery, and computer and electronic products. Livestock is the only non-manufacturing industry among Kentucky’s top ten exports. Livestock ranks as Kentucky’s tenth largest export ($244 million.) In 2004, Kentucky was first in the nation in livestock exports and first in the nation in equine (horse) exports ($157.2 million).

Kentucky Exports

By 2005, Kentucky was exporting globally to more than 165 foreign destinations. Canada is Kentucky’s largest foreign market. In 2004, Kentucky’s exports to Canada totaled almost $4.63 billion, which made up 35.7 percent of the state’s total exports. France is the state’s second largest export market. It received more than $1.08 billion of goods, or 8.3 percent of all Kentucky exports. Following Canada and France, Kentucky’s major export markets include the United Kingdom ($959 million), Japan ($865 million), and Mexico ($786 million).

http://www.thinkkentucky.com/kyedc/inttrade.asp

Gross Product & Income

Two key indicators of the strength of Kentucky’s economy are the gross state product and per capita personal income. The gross state product shows the values of the goods and services produced in Kentucky. The U.S. Department of Commerce reports that in 2004, Kentucky’s gross state product was about $135.4 billion. Per capita income shows the average income for each Kentucky resident. The U.S. Department of Commerce reports that in 2004, Kentucky’s per capita personal income was nearly $27,709.

Per Capita Income

Category United States  Kentucky  Kentucky Rank 

 Total Population (2004)   293,655,404  4,145,922   26th 

 Average County Population (2004) 

 94,393   34,549  -  

 Cost of Doing Business Index (2003) 

 100.0   85.0  4th  

 Cost of Living Index (1st Quarter 2005) 

 100.0   93.0   16th 

 Total State Taxes Paid (2004)   $593 Billion   $8.46 Billion   23rd Highest 

 Per Capita State Taxes Paid (2004) 

 $2,025   $2,041   21st Highest 

 State and Local Tax Burden (2005) 

 10.1%   10.3%   33rd Highest 

 Per Capita Personal Income (2004p) 

 $32,937   $27,709   42nd 

 Average Annual Wage and Salary (2003) 

 $37,130   $31,169   34th 

 Total Gross State Product (2004p) 

 $11.6 Trillion   $135.4 Billion   26th 

 Per Capita Gross State Product (2004)   $39,672   $32,661   42nd 

 Poverty Rate (2003)   12.5%   14.4%   41st 

 Annual Employment Rate (2004)   5.5%   5.3%   28th 

 Total Exports in Billions (2004)   $817.9   $13   19th 

 Exports per Capita (2004)   $2,785   $3,134   9th 

 Percentage of Adults With a High School  Education or Higher (2004) 

 85.0%   81.8%   44th 

 Percentage of Adults With Four  or More Years of College (2004) 

 25.0%   21.0%   48th 

Eastern Kentucky Economy

In contrast to the generally prosperous Bluegrass area and the growing industrial cities, eastern Kentucky, highly dependent on coal mining, has long been one of the poorest regions in the US. Beginning in the early 1960s, both the state and federal governments undertook programs to combat poverty in Appalachian Kentucky.

Greenup County Economy

Economy Greenup, KY United States Unemployment Rate8.40% 8.60%

Recent Job Growth-0.87% 0.35%Future Job Growth29.86%

32.10%Sales Taxes6.00% 5.00% Income Taxes5.80% 4.70%

Income per Cap.$22,300$26,154Household Income$42,299$50,935(source: www.bestplaces.net)

Greenup County Income

ESTIMATED HOUSEHOLDS BY HOUSEHOLD INCOMEIncome Less Than 15K16.05%12.37%Income between 15K and 25K13.96%10.53%Income between 25K and 35K12.84%10.88%Income between 35K and 50K14.68%15.37%Income between 50K and 75K20.11%20.14%Income between 75K and 100K10.52%12.41%Income between 100K and 150K8.34%11.27%Income between 150K and 250K2.66%5.01%Income between 250K and 500K0.77%1.86%Income greater than 500K0.08%0.16%

Greenup County OccupationsPOPULATION BY OCCUPATIONManagement,

Business, and Financial Operations7.82%14.04%Professional and Related Occupations18.18%20.61%Service14.58%14.45%Sales and Office27.56%26.75%Farming, Fishing, and Forestry0.66%0.70%Construction, Extraction, and Maintenance13.15%9.42%Production, Transportation, and Material Moving18.05%14.05%