1. The Kentucky Economy or “My Annual Attempt to Try and Tell You What’s Going On” Churchill Tax Free Fund April 26, 2006

2. 2 Kentucky’s Economy “A Quick History” 1980-1984Major Recession Heavy job loss 1984-2000Strong job growth Strong income growth Employment/Income growth greater than U.S.

3. 3 THEN November 2000 – The light switch... July 2003 – Job losses  Manufacturing  Telecommunications  Utilities

4. 4 UPDATE 2004 – 2005 Pretty good years  Growth in business services  Growth in health care  Some defense related growth  COAL  Stabilized manufacturing sector

5. 5 KY Employment is Growing Strongly March 2000: 1,831.6 July 2003: 1,775.3 March 2006: 1,839.7 Nonfarm employment in thousands

6. 6 Manufacturing Employment in KY has Stabilized in thousands

7. 7 KY Personal Income has shown Good Growth

8. 8 Kentucky Outlook  Continued employment growth (1.0 - 1.5%)  Improvement in manufacturing  OK income growth (5 - 6%)  Below U.S.  Housing Bust – Not major worry  Gasoline Price – Major worry  Continued state budget issues  Expenditure side of budget And We Will Try One More Time to Guess the Future

9. 9 I haven’t given up my day job! Remember …