Kentucky Chamber Discusses Federal Policy, Housing, and Economic Trends with Lexington Leaders

Changes in federal policy and the broader economy are creating uncertainty for Kentucky businesses and communities, but tax reform and recent housing reform legislation create new economic opportunities, Kentucky Chamber Vice President of Policy Charles Aull told members of the Lexington-Fayette Urban County Council’s Budget, Finance & Economic Development Committee Tuesday.

Aull, who leads the Kentucky Chamber Center for Policy and Research, briefed committee members on several major trends shaping the economy, including tariffs and inflation, housing costs, job growth, and business investment. Understanding those trends, he said, is important as local leaders make decisions affecting their communities.

He described the current economic picture as mixed, citing recent federal tax changes and housing reforms that could encourage business investment and economic development alongside continued uncertainty and cost pressures.

Among the most significant shifts Aull cited were tariffs. He presented data showing the average effective tariff rate has risen substantially over the past year and has changed more than 50 times since January 2025, increasing costs for businesses and adding uncertainty for the broader economy.

Aull linked those pressures to inflation, which remains above the Federal Reserve’s 2% target. Data shows that inflation has risen steadily since April 2025.

Aull also noted that job growth has weakened in Kentucky so far in 2026, with the state recording fewer jobs year over year. Lexington has performed better than the state overall.

Additional economic data and analysis are available at kychamber.com/economy.

Aull pointed to home building, economic diversification, and entrepreneurship as ways communities can build resilience during times of uncertainty. On housing, he highlighted the recently approved bipartisan 21st Century ROAD to Housing Act, describing the federal legislation as largely focused on increasing supply.

That focus aligns with research showing the need for more housing, particularly options affordable to low- and middle-income households. In Lexington, Aull cited Chamber research showing median home sale prices are now about 3.8 times median household income, compared with roughly 2.7 times household income three decades ago. He noted that new home construction carries a significant economic multiplier: 1,000 new single-family homes support a recurring annual impact of 757 jobs.

The report Building a Foundation for Growth is available at kychamber.com/housing.

The Kentucky Chamber recently announced plans to release a new report on housing challenges in Kentucky later this fall, in partnership with the Home Builders Association of Kentucky and Kentucky Realtors.