Northern Kentucky University economist Janet Harrah polled the audience at a recent Florence Business Council meeting for their opinions regarding the current performance of the United States economy.
“All right now — show of hands,” she asked. “How many of you think the economy’s doing well? … How do you think the economy’s doing poorly? … And how many are in the middle?”
The majority of the audience was in the middle. From Harrah’s perspective, the audience’s answers weren’t unusual.
“This is very, very typical response across the country,” Harrah said.
Approximately 28% of Americans currently rate national economic conditions as excellent or good, while 31% rate them as poor, according to a Pew Research Center poll published in January. Moreover, 41% rated the national economy as “only fair.”
“The US economy has 332 million people,” Harrah said. “We do not all experience the economy the same.”
With such mixed opinions on how Americans rate the national economy’s performance, Harrah highlighted reasons why people may feel this way.
Nationally, the U.S. experienced nine straight quarters of year-over-year growth in real GDP, according to data from the U.S. Bureau of Economic Analysis. Harrah, however, expects growth to slow over the coming decades. The reason? Declining population growth.
“GDP growth is probably going to slow over the next decade or so,” she said.
Harrah noted the Cincinnati Metropolitan Statistical Area’s economy is still experiencing growth, albeit at a slower pace than the national economy. Additionally, the metro area’s population growth rate is generally slower than the U.S., she said.
‘The Cincinnati MSA by definition is a labor market, and so the constraints of the population growth with the metro area also constrain our ability to grow jobs and employment in Northern Kentucky,” Harrah said.
Right now, Northern Kentucky’s labor market is “robust” but faces several challenges, Harrah said. The region boasts a low unemployment rate but doesn’t have enough workers to fill open positions.
Northern Kentucky Chamber of Commerce President Brent Cooper reiterated this reality, saying that the regional economy cannot continue to grow if the issue isn’t addressed.
“We’ve got businesses in Northern Kentucky right now, that because of the qualifications, they can’t find folks to fill these positions and so our economy can grow even more if we have a solution to that,” Cooper said.
Regarding inflation, Harrah expects inflation to slow in 2024 but doesn’t think prices will decrease. To demonstrate her point, Harrah showed that the monthly estimated payment on a house increased by 97% from the fourth quarter of 2019 to 2023.
“When we look at inflation and prices, the summary is, yes, the rate of inflation is slowing and likely to stabilize sometime next year, but that does not mean prices are going to go down,” she said.
In short, Harrah found that while certain aspects of the economy are positive, people with lower incomes are experiencing the most economic adversity due to high prices for food, fuel and rent.
“You have some things that are going really well – economic growth, labor markets doing well – but prices remain high and the cost of capital remains high,” Harrah said.
