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					                                                               Economic Briefs
                                                                            Week of July 25, 2008

U.S. Consumer Confidence Unchanged
American consumers' confidence was unchanged for the third week and has been in negative double digits for 50
weeks as high gasoline prices continue to damage their outlook on the economy. The ABC News Consumer
Comfort Index held steady at -41 in the week to July 20. Its all-time low, reached in May, is -51 and its historical
average -10. The Consumer Comfort Index's components were all unchanged from the previous week. Positive
views on personal finances were at 52 percent, those on the national economy were at 14 percent, and views on the
buying climate were at 23 percent.

July Reuters/Michigan Consumer Sentiment Rises To 61.2
Consumer sentiment, as measured by the Reuters/University of Michigan index, rose unexpectedly to 61.2 in late
July from a reading of 56.6 in early July. Economists had expected sentiment to fall slightly to 56.4 in late July.
The index of current economic conditions rose to 73.1 in late July from 69.5 in early July, and the index of
consumer expectations rose to 53.5 from 48.3. Consumer inflation expectations also fell in the late July survey.
Consumers saw year-ahead inflation at 5.1 percent, down from the 5.3 percent seen earlier in the month. Similarly,
consumers saw long-term inflation at 3.4 percent, down from 3.2 percent.

Consumers Fall Further Behind Financially
Americans' household finances are bad and getting worse, and that spells trouble for the economy for the rest of the
decade, according to a study by Moody's Consumers are behind schedule in payments or have
walked away from nearly $800 billion in household debt of all kinds — mortgages, credit cards, car loans. Higher
default rates are likely because of the housing downturn, a weakening job market, and higher prices.

Economic Outlook Retreats In Monthly Survey
The economy slowed in June as higher prices for food, fuel and other goods translated into a dip in growth.
The Conference Board's forecast of future economic activity fell by 0.1 percent, matching the consensus estimate of
Wall Street economists. The group revised May's number down to a 0.2 percent decrease from a 0.1 percent
increase. The report indicated that the economy may not improve over the next six months.

The leading indicators index is an aggregate of data such as stock prices, unemployment claims, weekly
manufacturing hours and the difference between short-term and long-term interest rates. Four of the 10 key factors
contributed positively to the index. Most important were building permits, an increase of 0.3 percent, and interest
rate spread, an increase of 0.2 percent.

Of the six factors that weighed down the index, money supply fell by 0.3 percent and stock prices decreased by 0.2

Economists See Growth Remaining Feeble
The hoped-for second-half economic rebound is looking to be lethargic, with the country straining under high
energy prices and fallout from the housing and credit debacles. Forty-five percent of economists believe the
economy won't log any growth or will clock in at a feeble 1 percent pace in the final six months of this year,
according to a survey by the National Association for Business Economics. And, 10 percent think economic activity
could actually contract during the period.

Thirty-two percent think the economy growth's during the second half could be between 1 percent and 2 percent,
which would mark a plodding performance. The more bullish are clearly in the minority camp: 11 percent think
growth will come in between 2 percent and 3 percent. Only 1 percent expect growth to surpass 3 percent.
Minimum Wage Hike Kicks In
The national minimum wage went up 70 cents on Thursday (July 24) as the second of three planned increases
mandated by Congress took effect. The national minimum wage will increase to $6.55 per hour as part of the Fair
Minimum Wage Act of 2007. Before last year's legislation, the national minimum wage had been left unchanged at
$5.15 an hour since 1997. The act calls for a third and final increase, scheduled to take place on July 24, 2009, that
will raise the minimum wage to $7.25 per hour.

Durable Goods Orders In Surprise Rise
Orders to factories for big-ticket manufactured goods such as cars, appliances and machinery rose at the fastest pace
in four months in June, a much stronger showing than had been expected. The Commerce Department reported that
orders for durable goods increased 0.8 percent last month, far better than the 0.4 percent decline that economists had
been expecting. It was the best showing since a 1.1 percent rise in February and reflected strength in demand for
heavy machinery, primary metals such as steel and even a slight rebound in the beleaguered auto industry.

Overall, demand for transportation goods fell by 2.6 percent as the slight increase in auto demand was offset by a
big 25.1 percent plunge in orders for commercial aircraft. Demand for military aircraft was also down, falling by 8.6
percent. Excluding the volatile transportation sector, orders for durable goods, items expected to last at least three
years, shot up by 2 percent , the best showing since last December and much better than the 0.2 percent decline that
had been expected.

Foreclosure Filings Up 120 Percent
As foreclosures continue to soar, 220,000 homes were lost to bank repossessions in the second quarter. That's nearly
triple the number from the same period in 2007. A total of 739,714 foreclosure filings were recorded during that
three-month period, up 14 percent from the first quarter, and 121 percent from the same period in 2007. That means
that one of every 171 U.S. households received a filing, which include notices of default, auction sale notices and
bank repossessions.

New Home Sales Stronger Than Expected
New home sales fell in June, but the annual rate was stronger than economists expected. The Census Bureau
reported that June sales of new single-family homes came in at a seasonally adjusted annual rate of 530,000, down
0.6 percent from May's revised reading of 533,000. That revision was significant; the original May reading was
512,000. The June figure was much higher than the economists' consensus forecast of 505,000.

Housing Market Weakens Again
Sales of existing homes slowed more than expected in June while inventory increased, according to an industry trade
group reading of the sluggish housing market. The National Association of Realtors reported that sales by
homeowners dipped in June to an annual pace of 4.86 million, down 2.6 percent from a pace of 4.99 million in May.
The existing home sales rate - including single-family, townhomes, condominiums and co-ops - is down 15.5
percent from the 5.75 million units sold in June 2007.

But with inventory still on the rise, home prices are falling further. The number of homes available for sale at the
end of June rose 0.2 percent to 4.49 million, which represented an 11.1-month supply of inventory at the current
sales pace, up from a 10.8-month supply in May. Meanwhile, the median price of a home sold in June fell to
$215,100, down 6.1 percent from $229,000 a year earlier.

2.2 Million Vacant Homes For Sale
The percentage of vacant homes available for sale remained relatively flat in the second quarter, but still hovered in
record territory. Some 2.8 percent of homes, excluding rental properties, were empty and on the market from April
through June, according to Census Bureau figures. The vacancy rate hit a record high of 2.9 percent in the first
quarter of 2008. It was 2.6 percent a year ago.
Just under 2.2 million empty homes were for sale in the most recent quarter. The vacancy rates for homes built in
April 2000 or later was 9.8 percent, more than triple that of houses constructed earlier.

Fuel Prices Fall For 6th Straight Day
Gasoline prices fell for the 6th straight day Wednesday (July 23), according to a nationwide survey. The average for
regular unleaded gas fell more than a penny to $4.042 a gallon, down from $4.055 the previous day, according to a
daily survey from motorist advocacy group AAA. Gasoline prices hit a record high of $4.114 a gallon last
Wednesday and held the level through Thursday. In the past year, gas prices have risen more than 36 percent.

Oil Prices Sink On Slumping Demand
Oil prices remained lower Wednesday (July 23) after a government report said supplies of crude fell less than
expected, and gasoline and distillate supplies rose more than forecast.
Light, sweet crude oil for September delivery fell $1.78 to $126.64 a barrel on the New York Mercantile Exchange.

In its weekly inventory report, the U.S. Energy Information Administration said crude stocks fell by 1.6 million
barrels last week. Analysts were looking for a drop of 1.9 million barrels, according to a consensus estimate of oil

Unemployment Claims Jump Past 400K
The number of newly laid off people filing claims for unemployment benefits bolted past 400,000 last week as
companies trimmed their work forces to cope with a slowing economy. The Labor Department reported that the
number of new applications filed for these benefits rose by a seasonally adjusted 34,000 to 406,000 for the week
ending July 19. That matched the level seen in late March. The last time claims were higher was after the
devastation of the Gulf Coast hurricanes in mid-September 2005. Then, they spiked to 425,000. The new snapshot
of layoffs was worse than economists were forecasting. They were expecting claims to rise to 375,000.

Federal Reserve Beige Book Report
Fourth District--Cleveland
Economic activity in the Fourth District increased slightly since the beginning of June. Factory output was largely
stable, though auto production declined. The housing industry remains weak, with no improvement expected for the
remainder of the year. Most commercial builders reported that business is expanding and backlogs are up. Sales by
District retailers were steady to improving. Demand for business loans grew, while lending to households was
mixed. Energy production was stable to increasing. And freight transport volume has been flat.

On balance, employment levels were largely unchanged, and wage pressures were limited to energy producers.
Staffing firms saw a slight increase in the number of job openings, while the number of job seekers was unchanged.
Job vacancies were greatest in health-care, energy, steel, and chemicals. Reports of rising input prices, especially for
metals and petroleum-based products, were widespread.

Eighth District--St. Louis
Overall economic activity in the Eighth District has remained stable since our previous report. Contacts noted
increases in the services sector and, except for the auto industry, in manufacturing. Retail sales reports were mixed.
Auto sales were down in June and the first half of July compared with a year ago. Home sales continued to decline
throughout the District. Lending at a sample of small and mid-sized District banks increased slightly from early
April to mid-June.

Kentucky Notes:
Real Estate and Construction
Compared with the same period in 2007, May 2008 year-to-date home sales were down 19 percent in Louisville.
May 2008 year-to-date single-family housing permits fell in nearly all District metro areas compared with the same
period in 2007. Permits declined 41 percent in Louisville.

Commercial real estate construction reports were mixed throughout the District. A contact in western Kentucky
reported that commercial construction is relatively strong.

Bleeding Cash, Ford Looks To Europe
Bleeding cash and with its very survival uncertain, Ford Motor Co., an icon of American automaking, will try to
import some of its success from across the Atlantic. Ford reported its worst-ever quarterly loss Thursday (July 24)
and announced plans to bring over six small, fuel-efficient cars it makes in Europe and start selling them in North
America, where Ford is losing billions on its truck-heavy lineup. Ford will retool plants to make the smaller cars.

The automaker said that the Louisville Assembly Plant, which makes the Ford Explorer midsize SUV, will be
getting a flexible body shop and begin making smaller, fuel-efficient cars to sell in the United States by 2011. Ford
is also moving production of the Lincoln Navigator and Ford Expedition from Michigan to the Kentucky Truck
Plant in early 2009. The Kentucky Truck Plant now makes Ford Super Duty pickups.

Louisville Mayor Jerry Abramson said Ford will invest $100 million in the Kentucky Truck Plant.

June Median Home Price Off 6 Percent
The median price of homes sold by members of the Greater Louisville Association of Realtors declined by nearly 6
percent in June to $141,000 when compared with a year earlier. The overall number of homes sold by association
members fell by 23 percent, underscoring a trend that the area continues to be a buyer's market.

In the first half of 2008, median home prices in Louisville declined 2.9 percent from a year ago, and 19.8 percent
fewer homes sold when compared with the same period in 2007.

Commercial Real Estate Activity Strong In Area
Industrial real estate activity in Louisville remains strong despite a sluggish national economy, according to a new
report from the firm Commercial Kentucky Inc. The local market absorbed 2.19 million square feet of industrial
space in the first six months this year, or more than double the amount for all of last year. Much of this year's total
has come from distribution centers and warehouses, especially inside the Watterson Expressway and in the South

Kentucky 12th Worst In Trying To Reduce Oil Dependency
Too many Kentuckians drive gas guzzlers, we drive them too much, and we don't make much money.
These three strikes have been distilled into a report that says high gas prices hurt Kentucky drivers more than most
Americans. When we pull away from the pump, we rank No. 5 in the nation in the percentage of our income we
leave behind, according to the report from the Natural Resources Defense Council.

Average Kentucky drivers spend 6.7 percent of their income on gas. The report — Ranking States' Oil Vulnerability
and Solutions for Change — also places Kentucky as the 12th-worst among states that are doing something to
decrease dependence on oil.

Jeff Sachs Autopark Closes Its Doors
Jeff Sachs Autopark in Frankfort closed Monday (July 21) after more than a decade in business. A receptionist
confirmed the closing, but Sachs declined to comment. The dealer sold General Motors vehicles, having previously
offered Chrysler, too, until it sold the license for that to the Bob Allen Motor Mall more than a year ago.

Starbucks To Close Six Stores In Kentucky, One In Lexington
Starbucks has released a full list of the 600 company-owned stores it plans to close starting this month. Six are in
Kentucky, including one each in Lexington, Danville, Paris and Somerset.
State Jobless Rate Rises Slightly For June
The latest employment figures show that Kentucky's jobless rate rose slightly to 6.3 percent in June. Office of
Employment and Training chief labor market analyst Justine Detzel blamed economic factors for the increase from
May's 6.2 percent unemployment. Detzel said the state's economy has been weighed down in part by soaring prices
for food and fuel. Non-farm employment fell by 4,400 jobs in the state. Detzel said the vast majority of the job
losses were attributed to temporary layoffs. More than 1.9 million Kentuckians were employed in June.

Area Gas Prices Are Down, But It May Not Last Long
Louisville-area gasoline prices have fallen by about 15 cents per gallon since late last week, but a spokeswoman for
one of the area's biggest suppliers of fuel says the drop may be only momentary.
Tropical Storm Dolly has moved into the Gulf of Mexico and while the National Weather Service said it's likely the
storm will intensify, it was unclear how severe it will become. The Gulf and its coast are a key transportation
gateway and supplier of oil to the Midwestern United States.

Linda Casey, a spokeswoman for Marathon Petroleum, said the storm means gas prices could be on the verge of
another jump. The storm could slow transportation of oil and gasoline, shut down refineries and oil platforms and
lead to higher prices, she said.

Gasoline in the Louisville area averaged $4.02 yesterday (July 21), down from $4.07 on Sunday and 15 cents lower
than Wednesday, according to prices posted by drivers to

                                          Commonwealth of Kentucky
                                         Office of State Budget Director
                                     Governor’s Office for Economic Analysis