The forecast for Kentucky's economic health in 2011 is just slightly better than 2010.

According to University of Kentucky’s Center for Business and Economic Research, the biggest challenge for the state remains the housing market. Those problems include declining prices,
slowing housing starts, and a high rate of foreclosures.

The center's 39th annual economic report reveals Kentucky is predicted to experience modest growth of 2.8 percent this year, and the state’s unemployment should average 9.5 percent in 2011 which is still above the national average.

Lexington's economy will continue to be relatively stronger than Louisville and Cincinnati-Northern Kentucky's which rely more heavily upon manufacturing, according to CBER Associate Director Christopher Jensen.

The report also finds the great recession is taking a great toll on Kentucky's effort to reduce poverty. In recent years, the state's poverty rate increased at a faster rate than nearly every other state making Kentucky among the ten most impoverished states.

"This report documents how Kentucky's economy is changing," said State Sen. Alice Forgy Kerr, the chair of the Senate Economic Development, Tourism, and Labor Committee. "Looking to the future, we need to ensure that we create a business climate that supports Kentucky's growing economic sectors," she added.

The report is one of the ways CBER, the applied economic research branch of the Gatton College, fulfills its mandated mission as specified in the Kentucky Revised Statutes to examine various aspects of the Kentucky economy. CBER performs research projects for federal, state, and local government agencies, as well as for private-sector clients nationwide.

"Our goal is to inform policymaking through research and analysis on the current status of factors affecting Kentucky’s economy, yet a common theme tying these articles together is their forward-looking perspectives,” said CBER Director Ken Troske.