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Gary Wagner and Mary DeStefano

LEXINGTON, KENTUCKY MSA | MAY 2018

Lexington—Steady Growth Continues

Growth in the Lexington metro area continues at a steady pace as evidenced by a decreasing unemployment rate, increasing employment,
increasing median home values, stable levels of consumer debt, and historically low credit card delinquency rates. In addition, according to the
Bureau of Labor Statistics, the Lexington metro area had the second-lowest metro area unemployment rate in Kentucky in January 2018, trailing
only the Evansville, IN-KY metro area.

METRO AREA SNAPSHOT
Unemployment Rate

Median Home Value

One-year
change

January 2018

Payroll Employment

Credit Card
Delinquency Rate

One-year
change

September
2017

One-year
change

2017:Q4

One-year
change

(percent)

(percentage points)

(percent)

(percentage points)

February 2018

Lexington

3.0

–0.8

$161,600

4.1

269

0.7

6.2

0.4

Kentucky

4.3

–0.9

$139,400

4.3

1,877

0.5

6.7

0.4

United States

4.1

–0.7

$210,200

7.6

143,869

1.0

7.2

0.1

In January 2018, the Lexington metro area’s unemployment rate was
the lowest it has been in a decade.
Percent
12
10

— Lexington
— Kentucky
— United States

8
6

■ Recession

4
2
0
2008

2010

2012

2014

2016

2018

(percent)

(thousands)

(percent)

 UNEMPLOYMENT RATE

In January 2018, the Lexington metro area’s unemployment rate was
3.0 percent, the lowest rate in the past decade and the second lowest metro
area rate in Kentucky behind the Evansville, IN-KY metro area. Kentucky
and the United States also saw their lowest unemployment rates of the
past decade, with the state’s unemployment rate dropping to 4.3 percent
and the nation’s rate dropping to 4.1 percent. The Lexington metro area’s
unemployment rate has also fallen sharply during the past 6 months—from
4.2 percent in August 2017 to 3.0 percent in January 2018. This reduction
of 1.2 percentage points is the largest 6-month drop in the metro area’s
unemployment rate since mid-2014.

Source: Bureau of Labor Statistics/Haver Analytics.

Though the Lexington metro area’s per capita GDP continues to improve,
it has yet to return to its prerecession level.
 GROSS DOMESTIC PRODUCT

Index, 2007=100
105
100

— Lexington
— Kentucky
— United States
Index

95

■ Recession

90
85
2006

2008

2010

2012

2014

Source: Bureau of Economic Analysis/Haver Analytics.

2016

The Lexington metro area’s per capita GDP continues to improve; however,
growth has flattened somewhat since 2015 for the metro area, the state, and
the nation. Despite the recent slowdown, per capita GDP growth in the
metro area, the state, and the nation has expanded by 11 percent, 9.5 percent,
and 9.6 percent, respectively, since the recovery began in 2009. Because
the metro area also experienced a much larger percentage reduction in per
capita GDP than either Kentucky or the United States between 2007 and
2009, per capita GDP in 2016 in the metro area remains 0.5 percent lower
than its 2007 level. In contrast, 2016 per capita GDP levels for the state
and the nation are now 4.9 percent higher and 3.5 percent higher than their
respective prerecession levels.

LEXINGTON, KENTUCKY MSA

FOURTH DISTRICT METRO MIX
YOUR DISTRICT, YOUR DATA

MAY 2018

EMPLOYMENT AND INDUSTRIAL SECTORS

Employment in the Lexington metro area continues to outperform Kentucky
and the United States.

 EMPLOYMENT

Index, 2007:M12=100
110

Employment continues to increase in the Lexington metro area, Kentucky,
and the United States. By September 2017, employment levels were 9.4 percent
higher than December 2007 levels in the metro area, 3.9 percent higher in the
state, and 6.0 percent higher in the nation. The metro area’s employment level
returned to its prerecession peak in May 2013. By comparison, state and national
employment did not return to their prerecession levels until August 2014 and
April 2014, respectively. In general, the metro area has been able to recover from
the recession at a faster rate than both the state and the nation. After April 2012,
the gap in recovery rates for the metro area and the state became apparent and
has continued to widen. In May 2013, the national recovery surpassed the state
recovery, but though the nation has continued to outperform the state, it has yet
to outpace the metro area.

— Lexington
— Kentucky
— United States
Index

105
100

■ Recession
95
90
2007

2009

2011

2013

2015

2017

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

Financial activities was the fastest-growing major sector in the Lexington
metro area between September 2016 and September 2017.
 EMPLOYMENT GROWTH BY SECTOR
Financial activities
Trade, transportation, and utilities
Manufacturing

— Lexington
— Kentucky
— United States

Construction
Education and health services
Leisure and hospitality
Professional and business services

		
–2		
1		
0		
1		
		Percent change

2			

3

Between September 2016 and September 2017, the Lexington
metro area’s financial activities sector experienced the highest growth
rate (1.6 percent) of all sectors. The sector was also the only sector
in the metro area that saw a higher employment growth rate than
the state (0.1 percent) and the nation (1.5 percent). Although the
financial activities sector constitutes only 3.5 percent of employment
in the metro area, its growth is welcome because its average annual
private salary ($70,236) is about 57 percent higher than the average
annual private salary for the metro area ($44,662). The metro area’s
professional and business services sector was the only sector to see
a decrease in employment (0.3 percent). Trade, transportation, and
utilities, the sector that employs the most people in the metro area,
saw the second-highest increase in the employment growth rate
(1.0 percent). The average annual private salary for this sector in the
Lexington metro area is $44,709, just 0.1 percent higher than the
average annual private salary for all sectors in the metro area.

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

During the year that ended with September 2017, the number of jobs
grew in all but one of the Lexington metro area’s major sectors.
 SECTOR EMPLOYMENT
Employment

12-month
change

Share of
employment

Trade, transportation, and utilities

51,144

511

18.9

Government

49,736

997

18.4

Professional and business services

37,534

­–95

13.9

Education and health services

33,097

183

12.3

Leisure and hospitality

31,574

163

11.7

Manufacturing

30,677

269

11.4

Construction

13,018

91

4.8

Financial activities

9,530

149

3.5

Natural resources and mining

4,578

86

1.7

Sector

Source: Bureau of Labor Statistics’ Quarterly Census of Employment and Wages.
FEDERAL RESERVE BANK of CLEVELAND

As overall employment increased by 0.8 percent in the Lexington
metro area from September 2016 to September 2017, all but one sector
saw growth. The professional and business services sector decreased
at a rate of 0.3 percent. Trade, transportation, and utilities—the metro
area’s largest sector—added more than 500 jobs, a 1.0 percent increase.
The government sector added nearly 1,000 jobs, the highest number of
jobs added by any sector; this was a 2.0 percent increase for the sector
from September 2016.

LEXINGTON, KENTUCKY MSA

FOURTH DISTRICT METRO MIX
YOUR DISTRICT, YOUR DATA

INCOME

On a year-over-year basis, per capita income decreased for the Lexington
metro area by 1.2 percent.
	P ER CAPITA INCOME

Thousands of dollars
52

	
Although employment has been generally increasing since June 2015,

50
— Lexington
— Kentucky
— United States

48
46
44

■ Recession

42
40
38
36
2006

2008

MAY 2018

2010

2012

2014

2016

per capita income growth flattened for the metro area, state, and
nation. Per capita income even decreased slightly for the metro area.
In this case, both the population and personal income levels increased
from 2015 to 2016, but population growth outpaced personal income
growth. By June 2016, per capita income was $44,399 in the metro area,
$40,301 in the state, and $50,930 in the nation. On a year-over-year
basis, per capita income decreased for the Lexington metro area
(by 1.2 percent) and state (by 0.1 percent), and it increased slightly for
the nation (by 0.3 percent).

Source: Bureau of Economic Analysis/Haver Analytics.

CONSUMER FINANCES

Consumer debt in the Lexington metro area has remained flat for the
past three years.
	C ONSUMER DEBT

Thousands of dollars
55
50

40

— Lexington
— Kentucky
— United States

35

■ Recession

45

30
25
20
2007

2009

2011

2013

2015

 onsumer debt has remained flat since approximately June 2014 for
C
the Lexington metro area, the state, and the nation. Since then, average
consumer debt was $33,566 for the metro area, $24,987 for the state,
and $39,208 for the nation. By December 2017, consumer debt had
increased slightly for the metro area ($33,633), the state ($25,101),
and the nation ($39,717). From June 2014 to December 2017, the
average monthly rate of change in total consumer debt at the metro
area, state, and national levels was less than 1.0 percent.

2017

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

Since 2010, credit card delinquency rates in the Lexington metro area
have been generally trending downward.
	C REDIT CARD DELINQUENCY RATE

Percent of credit card balances delinquent
14
12
— Lexington
— Kentucky
— United States

10
8
6

■ Recession

4
2
0
2007

2009

2011

2013

2015

2017

Credit card delinquency rates remain below those seen during the
recession and also below the peak levels observed immediately after
the recession. Compared to peak rates observed in 2010, credit card
delinquency rates in December 2017 were lower by 34.2 percent,
31.1 percent, and 43.6 percent for the Lexington metro area, Kentucky,
and the United States, respectively. Since 2010, the delinquency rates
have been generally trending downward despite some minor oscillation,
particularly for the metro area and the state. Current delinquency rates
for the metro area, the state, and the nation are 6.2 percent, 6.7 percent,
and 7.2 percent, respectively.

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

MAY 2018

Lexington metro area median home values continue to increase on a
year-over-year basis.
Year-over-year percent change
10
— Lexington
— Kentucky
— United States

5
0

■ Recession

HOUSING MARKET
 HOUSING PRICES

Median home values continue to increase on a year-over-year basis,
although rates of growth are slowing for the Lexington metro area
and Kentucky. The metro area achieved its record-high median home
value of $162,000 in January 2018. As of February 2018, the median
home value for the metro area was $161,600, and the state and the
nation reached their record highs, with median home values of
$139,400, and $210,200, respectively.

–5
–10
2008

2010

2012

2014

2016

2018

Source: Zillow.com/Haver Analytics.

As of February 2018, building permits issued in the Lexington metro area
still trail their prerecession levels.
	H OUSING PERMITS

Index, 2007:M12=100, six-month moving average
140
120

— Lexington
— Kentucky
— United States
Index

100
80

■ Recession

60
40
2007

2009

2011

2013

2015

2017

Although housing permit issuances are generally trending upward
in the metro area, state, and nation, the number of permits issued
remains below prerecessionary levels. In the Lexington metro area,
the number of permits issued in February 2018 was 4.4 percent
below its prerecession level. By comparison, the pace was somewhat
slower for the state and the nation, as their numbers of permits issued
were 12.8 percent and 6.7 percent below their respective prerecession
levels. For brief periods of time, the metro area saw issuance levels
at or above its prerecession levels, but this has not been experienced
since May 2017.

Source: US Census Bureau/Haver Analytics.

DEMOGRAPHICS AND EDUCATION
Lexington Metro Area
			
		
2016
Population

United States

Change from		
2010
2016

Change from
2010

506,760

+7.1%

323,406,000

+4.5%

11.2%

–2.1 pp

12.5%

–1.9 pp

Adults with an undergraduate
37.2%
degree or higher

+6.1 pp

31.3%

+3.1 pp

35.9

+0.7

37.9

+0.7

$55,782

+5.6%

$59,774

+4.6%

Adults with less than a
high school diploma

Median age (years)
Median household income

 LEXINGTON, KENTUCKY

		The Lexington metro area’s population is increasing at a faster rate than
the nation as a whole. According to the Census Bureau, the growing
population can be attributed to in-migration (both domestic and
international) as well as the higher birth-to-death ratio. Although the
metro area’s median household income is nearly 7 percent lower than
the nation’s, income is growing more strongly in the metro area than in
the nation overall. Additionally, 37.2 percent of the metro area’s adult
population has at least a bachelor’s degree; this is 5.9 percentage points
greater than the nation’s same population. Lexington’s proximity to
the University of Kentucky makes higher education more accessible to
those living in the metro area.

Note: Percentage points is abbreviated as pp.
Source: US Census Bureau population estimates, American Community Survey.

Gary Wagner is vice president and senior regional officer of the Cincinnati Branch of the Federal Reserve Bank of Cleveland. Mary DeStefano is a research analyst at the Branch. The
authors thank senior research analyst Christopher Vecchio for preparing the charts.
All monthly and quarterly figures are seasonally adjusted, and all dollar figures are in constant dollars, for which the base period is provided by the latest available data. Home prices are
an exception, and they are not adjusted for inflation. 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 prerecession levels. If levels were growing before the
recession, prerecession indexes will be below 100; if levels were falling before the recession, prerecession 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