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LEXINGTON, KENTUCKY MSA | APRIL 2017

Growth Remains Solid in the Lexington Region

Economic conditions remain strong in the Lexington metro area. The most recent unemployment rate is the lowest it has been since 2001, and the
region has nearly 9 percent more jobs today than it did in 2007. Income levels are growing, and consumer debt levels and credit card delinquency rates
are both well below the national average. The region’s strength as an education center is also evident, as Lexington boasts a higher percentage of adults
with bachelor’s degrees and a lower percentage of adults without high school diplomas than the national average.

METRO AREA SNAPSHOT
Unemployment Rate

Median Home Values

January 2017

One-year
change
(percent)

January 2017

Lexington

3.8

–0.4

Kentucky

5.0

United States
Nearby metro area average

Payroll Employment

Credit Card
Delinquency Rates

One-year
change

September
2016

One-year
change

2016:Q4

One-year
change

$153,500

6.6

267

1.8

5.8

–0.9

–0.3

$133,700

6.4

1,869

1.5

6.3

–0.4

4.8

–0.1

$195,300

7.2

142,452

1.8

7.1

–0.7

4.2

–0.1

$160,520

7.3

913

2.7

6.0

–0.4

(percent)

(percent)

(thousands)

(percent)

(percent)

(percent)

The Lexington metro area’s unemployment rate has been below those of
Kentucky and the nation for a decade.
 UNEMPLOYMENT RATE

Percent
12

6

— Lexington
— Kentucky
— United States
— Nearby metro
average

4

■ Recession

10
8

2
0

2007

2009

2011

2013

2015

2017

Labor market conditions in the Lexington metro area remain among the
strongest in the Fourth District. With January’s reading of 3.8 percent, the
region’s unemployment rate has been below 4 percent for each of the past
10 months. Recent estimates have been well below Lexington’s lowest
pre-Great Recession unemployment rate (3.9 percent in June 2007) and
are also the strongest readings for the region since 2001. Consistent with
rates during much of the past decade, the metro area’s unemployment rate
continues to be well below levels in the commonwealth (5.0 percent in
January), the nation as a whole (4.8 percent), and the average of nearby metro
areas (4.2 percent).

Source: Bureau of Labor Statistics/Haver Analytics.

Output growth in the Lexington metro area has accelerated sharply during
the past two years.
 GROSS DOMESTIC PRODUCT

Index, 2007=100
108
106

— Lexington
— Kentucky
— United States
— Nearby metro
average

104
102
100
98
96

■ Recession

94
92
90

2007

2009

2011

2013

Source: Bureau of Economic Analysis/Haver Analytics.

2015

Real per capita GDP for the Lexington metro area at the end of 2015 (the most
recent data available) remains just below its 2007 levels. The metro area’s recovery
has lagged that of the commonwealth and the nation partially because output
declined much more sharply in the Lexington area during the downturn. For
instance, from 2007 to 2009, inflation-adjusted per capita output growth declined
by more than 9 percent in the metro area, compared to reductions of 5.5 percent
and 4.2 percent for the commonwealth and the nation, respectively. However,
output growth in the metro area has accelerated sharply during the past two years,
increasing from 0.4 percent in 2013 to 3.8 percent in 2015. Lexington’s most
recent estimate for 2015 is notably higher than that of the commonwealth’s
(3.3 percent) and the nation’s (2.8 percent) during the same period.

LEXINGTON, KENTUCKY MSA

FOURTH DISTRICT METRO MIX
YOUR DISTRICT, YOUR DATA

APRIL 2017

EMPLOYMENT AND INDUSTRIAL SECTORS

Job growth in the Lexington metro area remains quite strong.

 EMPLOYMENT

Index, 2007: M12=100

Job growth in the Lexington metro area remains quite strong and generally
continues to outperform both the commonwealth’s and the nation’s. In the
most recent 12-month period ending in September 2016, employment
in the Lexington metro area expanded at a rate of 1.8 percent, compared
to 1.5 percent for Kentucky and 1.8 percent for the nation. Relative to
pre-recession December 2007 employment levels, the Lexington metro
area now has 8.7 percent more jobs (as of September 2016). This number is
noticeably larger than comparable figures for Kentucky (3.5 percent more
jobs than in December 2007) and for the nation (4.9 percent more jobs).

112
— Lexington
— Kentucky
— United States
— Nearby metro
average

108
104
100

■ Recession

96
92
2006

2008

2010

2012

2014

2016

Source: Bureau of Labor Statistics’ Quarterly Census of Employment and Wages.

The Lexington metro area experienced widespread employment gains
across most sectors during the past 12 months.

 EMPLOYMENT GROWTH BY SECTOR

The Lexington metro area, the commonwealth of Kentucky, and the nation
as a whole continued to experience relatively widespread employment
gains across most sectors during the past 12 months ending in September
2016. The notable exception is the natural resources and mining sector,
which, during the past 12 months, has contracted by –2.8 percent in the
Lexington metro area, –15.5 percent in Kentucky, and –5.2 percent in the
nation as energy use and investments continue to transition away from
coal. In the Lexington metro area, year-over-year employment growth was
in the 2 percent to 3 percent range in three different sectors: education and
health services, government, and professional and business services. The
region’s two hottest sectors—construction and trade, transportation, and
utilities—expanded at a clip of 9.0 percent and 4.7 percent, respectively,
during the past year.

Construction
Trade, transportation,
and utilities
Professional and business
services
Government

— Lexington
— Kentucky
— United States

Education and health services
Financial activities
Leisure and hospitality
Manufacturing
Natural resources and mining

		 –20

–10
0
Percent change

10

Source: Bureau of Labor Statistics’ Quarterly Census of Employment and Wages.

Lexington’s three largest sectors have experienced solid employment
gains in the last 12 months.

Employment

12-month
change

Share of
employment

Trade, transportation, and utilities

50,853

2,312

19.0

Government

48,695

1,338

18.1

Professional and business services

37,582

1,048

14.0

Education and health services

33,008

783

12.3

Leisure and hospitality

31,248

112

11.6

Manufacturing

30,549

–79

11.4

Construction

12,923

1,067

4.8

Financial activities

9,381

61

3.5

Natural resources and mining

4,513

–132

1.7

Sector

Source: Bureau of Labor Statistics’ Quarterly Census of Employment and Wages.

FEDERAL RESERVE BANK of CLEVELAND

 SECTOR EMPLOYMENT

	
Lexington’s three largest sectors—trade, transportation, and utilities;

government; and professional and business services—all experienced
solid employment gains between the third quarter of 2015 and the third
quarter of 2016. Those sectors, which account for more than 51 percent
of the region’s jobs, gained nearly 4,700 jobs. Manufacturing employment
declined by 79 jobs during the past 12 months (–0.25 percent), while
employment in natural resources and mining contracted by 132 jobs.
Although natural resources and mining remains a sizable employment
sector for Kentucky’s economy, the sector employs roughly 4,500 people
in Lexington and accounts for only 1.7 percent of the metro area’s jobs.

LEXINGTON, KENTUCKY MSA

FOURTH DISTRICT METRO MIX
YOUR DISTRICT, YOUR DATA

APRIL 2017

INCOME
Inflation-adjusted per capita personal income in the Lexington metro area
grew 4.0 percent in 2015—almost double the pace of the previous year.
	I NCOME PER CAPITA

Thousands of dollars
50

	
According to the most recent data, inflation-adjusted per capita personal

48

— Lexington
— Kentucky
— United States
— Nearby metro
average

46
44
42
40

■ Recession

38
36
34

2007

2009

2011

2013

2015

income in the Lexington metro area grew at a rate of 4.0 percent in 2015.
This pace was almost double that of the previous year (2.3 percent from
2013 to 2014) and slightly above the pace for the nation during the same
time period (3.5 percent). Despite the recent growth, real per capita
income levels in the metro area and the commonwealth remain well below
the national average and the average of nearby metro areas. In Lexington,
for instance, the current real per capita income of $44,191 is 9.2 percent
below income levels in nearby metro areas and more than 10.0 percent
below the national average of $49,370.

Source: Bureau of Economic Analysis/Haver Analytics.

CONSUMER FINANCES
Consumer debt levels in the Lexington metro area, as in Kentucky, are
well below the national average.
	C ONSUMER DEBT

Thousands of dollars
55
— Lexington
— Kentucky
— United States
— Nearby metro
average

50
45
40
35

■ Recession

30
25
20
2004

2006

2008

2010

2012

2014

2016

 onsumer debt levels in the Lexington metro area, Kentucky, and
C
the nation have remained relatively flat since late 2014, following
the deleveraging cycle that began in late 2009. In addition, both
the Lexington metro area and the commonwealth continue to have
consumer debt levels that are well below the national average. For
instance, debt levels in the Lexington metro area are 14 percent below
the national average and 6 percent below the average of nearby metro
areas. Even with some recent (modest) growth in debt levels, current
consumer debt in the Lexington metro area is more than 11 percent
below the average level from 2007.

Source: Authors’ calculations from the Federal Reserve Bank of New York’s
Consumer Credit Panel/Equifax.

The credit card delinquency rate for the Lexington metro area continues
to drop from its peak in 2010.
	C REDIT CARD DELINQUENCY RATES

Percent of credit card balances delinquent
14
12

— Lexington
— Kentucky
— United States
— Nearby metro
average

10
8
6

■ Recession

4
2
0
2004

2006

2008

2010

2012

2014

The credit card delinquency rate for the Lexington metro area continues
to drop from its peak of 9.5 percent in 2010, and it remains well below
the national rate. According to the most recent data available (2016:Q4),
5.8 percent of all credit card balances are considered delinquent in
Lexington, compared to 6.3 percent for Kentucky and 7.1 percent for
the nation. The current rates for both the Lexington metro area and
Kentucky are either the lowest recorded rate or tie the lowest recorded
rate documented by the Equifax data (available since 2004:Q1).

2016

Source: Authors’ calculations from the Federal Reserve Bank of New York’s
Consumer Credit Panel/Equifax.

FEDERAL RESERVE BANK of CLEVELAND

LEXINGTON, KENTUCKY MSA

FOURTH DISTRICT METRO MIX
YOUR DISTRICT, YOUR DATA

APRIL 2017

HOUSING MARKET

Year-over-year home price growth in the Lexington metro area has
accelerated in the past six months.

 HOUSING PRICES

Year-over-year nominal home price growth in the Lexington metro area has
accelerated noticeably in the past six months and is now much closer to the
national average than at any time in the post-recession period. In the most
recent reading (January 2017), annualized home price growth in the area
was 6.6 percent, just slightly higher than Kentucky’s rate (6.4 percent) and
just slightly less than the national rate (7.2 percent). One of the reasons the
Lexington metro area and Kentucky have experienced slower growth in
nominal home prices is that these housing markets weathered the recession
much better than the nation as whole. For example, while home prices dropped
3.6 percent in the Lexington metro area and 4 percent in Kentucky during the
Great Recession, home prices nationally fell more than 20 percent. Home prices
nationally also remain about 0.6 percent below pre-recession peak values, while
prices in the Lexington metro area and Kentucky are presently 11.5 percent and
10 percent above their pre-recession peak figures, respectively.

Year-over-year percent change
15
— Lexington
— Kentucky
— United States
— Nearby metro
average

10
5
0

■ Recession
–5
–10

2007

2009

2011

2013

2015

2017

Source: Zillow.com/Haver Analytics.

Though the number of permits issued for new private homes in the Lexington
area has slowed in 2017, it is still 10 percent higher than in December 2007.
Index, 2007: M12=100, six-month moving average
240
220
200
180
160
140
120
100
80
60
40
20
		2007
2009
2011
2013
2015

	H OUSING PERMITS

Although permits for new private homes in the Lexington metro area
have slowed in 2017 from their surge in the second half of 2016, the
rate remains above that of the commonwealth and the nation relative to
December 2007 levels. In the most recent data available (February 2017),
the number of permits for new homes in the Lexington metro area are
10 percent more than December 2007 levels, compared to 5 percent for
Kentucky and 0.9 percent for the nation. A total of 2,600 new permits
were issued in the Lexington metro area in 2016; this is the highest
number of permits issued in a year since 2006.

— Lexington
— Kentucky
— United States
— Nearby metro
Cincinnati
average
Average of
nearby
metros
■
Recession
United States
Ohio
2017

Source: US Census Bureau/Haver Analytics.

DEMOGRAPHICS AND EDUCATION
Lexington Metro Area
			
		
2015

United States

Change from		
2009
2015

Change from
2009

500,535

+7.1%

321,419,000

Adults with less than
a high school diploma (percent)

11.2

–2.2

12.9

–1.9

Adults with an undergraduate
degree or higher (percent)

35.5

+1.0

30.6

+2.7

36

1.1

37.8

+1

$54,593

+2.9%

$57,325

+0.5%

Population

Median age (years)
Median household income

+4.8%

 LEXINGTON, KENTUCKY

	
As of 2015, the Lexington metro area has a population

of more than 500,000, up 7.1 percent since 2009. During
the same period, population growth in the nation
increased at a rate of only 4.8 percent. The presence
and strength of the education sector is also evident, as
the Lexington metro area has a higher percentage of
adults with bachelor’s degrees than the national average
(35.5 percent compared to 30.6 percent) and a lower
percentage of adults without high school diplomas
(11.2 percent compared to 12.9 percent).

Sources: US Census Bureau population estimates; American Community Survey.

All monthly and quarterly figures are seasonally adjusted, and all dollar figures are in current dollars except home prices (which are left nominal). Where applicable, these adjustments
are made prior to calculating percent changes or indexes. Several charts use indexed measures to facilitate comparisons across regions and have a reference line at 100. These numbers
can be thought of as the percentages of pre-recession levels. If levels were growing before the recession, pre-recession indexes will be below 100; if levels were falling before the recession, pre-recession indexes will be above 100.
The Federal Reserve Bank of Cleveland, including its branch offices in Cincinnati and Pittsburgh, serves the Fourth Federal Reserve District (Ohio, western Pennsylvania, the northern
panhandle of West Virginia, and eastern Kentucky).

www. clevelandfed.org

FEDERAL RESERVE BANK of CLEVELAND