KC Economy

Revised Data Shows That Things Weren’t So Bad After All

2012-03-27T09:39:00.002-05:00

Kansas City area employment data has been a bit of a head scratcher the past couple of years. As the economy started to recover, the rest of the nation began to see real employment growth, but that growth seemed (according to the data) to miss Kansas City. The chart below shows the country (the yellow line) experienced modest year-over-year employment growth of about 1 percent starting in mid-2010. In the Kansas City area, however, data showed that employment was stagnant at best (the red line) and declined at a 1 percent clip during some periods. This decline seemed to run counter to other, more positive employment data we were seeing, like increases in help wanted ads, and decreasing unemployment rates.

To assess current employment trends, we rely on data from the Current Employment Statistics — data the Bureau of Labor Statistics gathers from a monthly survey of approximately 486,000 worksites across the country. Once a year, BLS re-benchmarks the CES to reflect new data from the Quarterly Census of Employment and Wages (QCEW). The revised data (the blue line) now shows the Kansas City area economy has been recovering right along with the rest of the country, not lagging.

The lesson to remember here is that initial local employment data is often revised — and sometimes those revisions can completely change our perceptions of how we're doing.

The new data solves what had been a big mystery for Kansas City area employment watchers. The early stages of the nation’s employment recovery did not pass us by after all. Instead, we've actually experienced real employment gains over the past year and a half.

As always, we like to keep things in perspective. Even with these new and better numbers, metro-area employment is still down by more than 50,000 from its pre-recession peak. But we can be more confident that the region’s economic recovery is on track.

The new data may tempt us to shout "We’re back," but the truth is, we never really left.

Kansas City Leads all Large Metros in Unemployment Rate Decline

2012-03-23T16:41:00.004-05:00

At KCeconomy we often compare the Kansas City region to our peer metro areas, and generally we like to be on top. In the case of annual unemployment rate change, however, the lowest number is exactly where we want to be.

New data shows that Kansas City had the largest drop in unemployment rates among our peer metros between January 2011 and January 2012. Over the past year, our unemployment rate dropped 2.1 percentage points and now stands at 7.3 percent. Not only did we outperform our peers in this area, but our unemployment rate had the greatest drop of all large metros in the country!

For some time, we have puzzled over the sluggish performance of the region’s labor market. As the nation has started to recover jobs, we seemed to lag. Data from late 2011 showed that local employment activity might have started to pick up steam, and today’s data suggests that Kansas City has really begun to make up for lost time.

While our unemployment rate is dropping faster than other metros, as indicated in the chart above, we still have room for improvement. The chart below shows that our current rate is still higher than many of our peers. That’s another statistic where we aspire to be on the bottom – with the lowest number, that is.

Missouri Leads Region in Low Business Taxes but Lags in Employment Growth

2012-01-11T10:07:00.006-06:00

In recent press release, the Kansas Economic Progress Council calls Missouri the “real tax competitor” in the region due to its low business tax rates. The press release cites a report conducted by the Arkansas Chamber of Commerce which analyzed effective business tax rates in eight states (Arkansas, Kansas, Louisiana, Mississippi, Missouri, Oklahoma, Tennessee and Texas). Missouri had the lowest effective tax rate in five of eight categories the study measured.

On the surface, this looks like good news for Missouri, as low business taxes should allow the state to be more competitive than others in the region in growing and attracting businesses. But is this low-tax strategy really effective?

Presumably, low taxes would lower business costs and enable Missouri firms to charge relatively lower prices, thus increasing the demand for Missouri products. But if so, we would expect this to show up as increased output and employment in Missouri relative to other states. Unfortunately, this has not recently been the case. As the chart below illustrates, Missouri ranked last among the eight states in terms of employment growth over the past year. Employment in Missouri has grown by 1,400 for the year ending November 2011, an increase of 0.1 percent. Louisiana, on the other hand added 46,700 jobs between November 2010 and November 2011 — despite having the highest overall effective tax rate.

Most studies of business relocation find that while relative tax rates play a role, it’s a relatively minor one compared to things like the quality and availability of labor, access to markets, availability of high-quality transportation services and proximity to a cluster of businesses serving similar markets. In other words, just like people, businesses seek value -the quality of service received relative to the price paid – rather than low cost alone.

As the employment growth in higher tax states indicates, at least some growing firms are finding a better “value proposition” in states other than Missouri.

Here is a link to the KEPC press release.

Retail Sales Starting to Trend Up

2011-12-02T09:21:00.004-06:00

During this time of year, retail sales become a key economic indicator. Early indications are that the 2011 holiday shopping season got off to a record start with consumers spending an estimated $45 billion over the weekend after Thanksgiving. Retail sales dipped during the 2007-09 recession and have been slow to recover, so this early indicator is a hopeful one. A more confident consumer will help spark what has been a slow economic recovery.

The chart below shows retail sales by quarter and a smoothed four quarter moving average. (Taxable retail sales differ from retail sales in that some items like some medical equipment and farm machinery are exempt from sales taxes so their sales are not included.) Regional retail sales peaked in mid-2008 before declining with the recession throughout 2009. The latest data available, through the 2^nd quarter of 2011, shows regional retail sales starting to trend up again, but still not at pre-recession levels.

Within the metro, 36 percent of these taxable sales ($8.98 billion) occurred in Johnson County. Jackson County was a close second with 32 percent ($8.07 billion).

On a per-capita basis, retail sales in Johnson County stands out again. Johnson County has retail sales in excess of $16,000 per person. Platte County is second with more than $15,000. All other counties are below the metro average of $12,414 per person. Retail sales taxes are a key contributor to revenues for many local governments. It would appear that this source of revenue might be heading back to the days of steady growth.

Employment Data Whiplash

2011-11-02T10:40:00.002-05:00

In an August press release, the Bureau of Labor Statistics said that Kansas City was the second-worst metro in the country in terms of employment change. Between August 2010 and August 2011, the region lost more than 11,000 jobs. Only Atlanta had a worse year-over-year performance.

This had us scratching our heads because it is unusual for Kansas City to be at the extreme end of most economic issues. Generally we tend towards the median.

Fasten your seatbelts. After posting that loss of 11,000 jobs in August, the September data shows a robust rebound — jobs in the region are up nearly 3,000 over September 2010.

Now, an employment increase of 3,000 jobs is nothing to write home about. In fact, it is a very bad annual figure — but at least it is on the positive side of the ledger. The negative August numbers got a lot of press. September’s good news needs some coverage, too.

The chart below shows that while U.S. employment (as measured by a year-over-year percent change) turned upwards in late 2009, and stayed positive through the middle of 2010, Kansas City’s has zigged and zagged. We’ve struggled to show consistent year-over- year growth since before the recession.

Our September spike is evident on the extreme right side of the chart. We will see in coming months if this spike is an anomaly or whether we can put the neck braces away and begin to enjoy the smoother ride of a long-term employment expansion.

Third-quarter GDP figures offer reason for optimism

2011-10-27T14:46:00.001-05:00

An initial look at the national economy’s third quarter should lessen the fears of a double-dip recession. Though the growth rate of 2.5 percent isn’t headline material in and of itself, it is solid enough to think the economy is slowly crawling back to sustainable long-term growth.

A detailed look at the numbers shows strong growth in domestic investment, specifically in equipment and software. This is an encouraging sign, as businesses have been reluctant to invest while the recovery is still shaky. Personal consumption grew to its highest point this year (a 2.4 percent growth rate) while government consumption was flat.

To be sure, there are still concerns out there. Chief among those is the European debt crisis. Just one year ago, we thought the economy was well on its way to recovery, but the earthquake in Japan and high fuel prices put on the brakes. Now, with consumption and private investment picking up some steam, the basic engines of economic recovery appear to be getting back on track.

The Roller Coaster Ride Continues.

2011-07-11T11:03:00.000-05:00

A common joke in economic circles (yes, economists do occasionally have a sense of humor) is that economic forecasters are around just to make weather forecasters look good. Well, in our defense, here is a sample of what we have to work with.
Last Thursday we got this headline “Stocks advance on strong jobs report.” Friday’s headlines read “Stocks drop after weak jobs report.”
Two days, two different reports, two different directions for the stock market. So how can we have such divergent job reports released within 24 hours?
Let’s start with the “strong” jobs report. This is actually two separate reports. The first was the federal government’s weekly report on first-time unemployment benefits. This report showed that for the week ending July 2, fewer filings for unemployment insurance occurred than expected. This definitely qualifies as good news.
The second good news report that drove the market up on Thursday was a report from ADP, a private company that provides payroll services for businesses. This report found that employment in the private sector added 157,000 jobs in June, far exceeding expectations.
This set the stage for Friday’s unveiling of the official June jobs report. With the positive news released on Thursday, hope arose that the June employment numbers would show a solid rebound from May’s disappointing figures.
Instead the June figures were even more disappointing. The national economy added a paltry 18,000 jobs in June. Economists had expected growth of about 125,000. According to the June report, private employers only added 57,000 new jobs, while the public sector lost 39,000. This is a far cry from the 157,000 new private sector jobs ADP indicated we created in June.
The discrepancy between these reports is really not the story here, although it is a good example of how difficult it is to accurately measure our economy. The true story is, and continues to be, where are all the jobs?
This year had been fairly solid in job creation through April, but the back-to-back down months since then is a real concern. Jobs will lag the recovery, but by this point, we would expect to see some real employment growth.
This may be just a temporary employment lull caused by the earthquake in Japan and the political wrangling over the debt ceiling. On the other hand, it may instead be a new normal brought on by a combination of increased productivity and a private sector that is more concerned with paying down debt than spending. [Little known fact – the private sector, households and businesses, holds 63 percent of the nation’s nonfinancial sector debt, twice as much as government’s 31 percent.] Which of these two scenarios will ring most true remains to be seen.

Higher productivity equals fewer workers working harder

2011-06-21T14:33:00.001-05:00

The nation is now two years removed from the end of the recession. The economy, as measured by GDP is now at pre-recession levels. We have become accustomed to seeing the economy expanding well before employment picks up after a recession. Employment has always been a lagging variable, but should it lag by two years?
The chart below perhaps best illustrates our current economic situation. The economy has recovered. We are producing the same amount of economic output as we were back in late 2007. But now we are doing this with 7 million fewer workers.

Source: Bureau of Labor Statistics, Bureau of Economic Analysis

So far in 2011, employment has begun to pick up slightly, so perhaps employers have maxed out the productivity they can get from their existing workforce. But questions remain: Is the lack of employment so far simply an unfortunate reflection of the severity of the recession, with employers still stinging so much they are reluctant to take on the risk of hiring? Or, are we at a “new normal” where new technologies and outsourcing mean we shouldn’t expect to see full employment (below 5 percent) anymore? This writer still leans to the former, but if employment levels don’t start climbing soon that answer may soon change.

Great National Job Numbers

2011-05-06T15:38:00.000-05:00

April job numbers for the nation were released today and the results exceeded expectations as 244,000 jobs were added last month. So far this year the nation has added 768,000 jobs. Perhaps even more encouraging is the broad nature of the growth. Every sector except government saw employment increases. Retail trade led the way with 57,100 new jobs, followed by professional and business services with 51,000 jobs.
Despite the added jobs, the unemployment rate still increased in April, but that’s not all bad news. The unemployment rate rose because the size of the labor force increased faster than employment. This reflects the renewed optimism of people who had given up looking for work, but now — with positive economic news on the rise — are reentering the job market and giving it another try.
The economy is still on shaky ground as spikes in energy costs threaten the recovery, but it is certainly encouraging to see private sector businesses across the board actually bringing on more staff in significant numbers.

Kansas City, the Brain Magnet

2011-03-03T10:49:00.000-06:00

Lists that rank cities on various criteria seem to be a trendy way for the media to attract attention. You can find lists for the most livable cities, the safest cities or greenest cities. There are lists telling you the best cities for single people or best cities for bicycle riders. There are so many, in fact, it is sometimes easy to overlook the truly interesting ones — interesting to us economists, that is. Forbes recently produced such a list and Kansas City ranks pretty well on it. On the list of top “brain magnet” cities, the Kansas City metro ranks fifth. The rankings were based on the increase in the number of residents who are at least 25 years old and college educated, compared to the population as a whole, between 2007 and 2009. The Kansas City area added more than 38,000 adults with at least a bachelor’s degree during that time.
Prevailing wisdom says that recent college graduates flock to the trendy coastal cities after graduation, but the data shows this is not really the case. The article says graduates are increasingly looking at affordability and employment growth when deciding where to start their careers. This would help explain why the list is dominated by lower cost metros away from the coasts.
And while we’re talking about lists, Kansas City was also on another recent Forbes top ten list that’s not as impressive. We rank seventh on the list of most miserable sports cities. Baseball season starts later this month. Come on, Royals, let’s try to get off that list!

New Metro Employment Figures are Puzzling

2011-02-03T10:18:00.000-06:00

At KCEconomy.com, we strive to find interesting facts and figures regarding our local economy and do our best to explain what these figures mean. It is only fair that we include facts and figures that we… well, simply cannot explain. Such is the case with the recent employment figures for metro areas.
According to the Bureau of Labor Statistics the Kansas City area saw nonfarm employment decline 1.9 percent between December 2009 and December 2010. Out of the large metro areas with populations greater than 750,000, only Sacramento, Calif., had a more severe decline (2.2 percent). For the Kansas City area this means a loss of nearly 16,000 jobs.
The BLS data is the industry standard. It is the source for local area unemployment rate data, but these Kansas City numbers on employment change just don’t seem right to us. In the 2011 economic forecast MARC prepares for the Greater Kansas City Chamber of Commerce, released back in October, we predicted modest employment growth of about 8,000 for the region in 2010. This prediction was made using a national employment forecast with our model of the regional economy to predict how the local economy will perform. In the past, this approach has proved to be fairly accurate. This is the first time our estimate of the region’s employment direction is opposite that of BLS. Additionally, it has been generally accepted that our local economy weathered the recession better than other parts of the country. It is certainly surprising that Kansas City is so low relative to other large metros in terms of employment growth.
This BLS data will be revised this spring and we will look over the updated numbers with great interest. Either the current figures have somehow gotten out of alignment in 2010, or we may have to re-think how the local economy relates to the nation’s.
In the meantime, we will examine local employment data in detail so we can perhaps shed some light on this puzzling difference.

GDP up 3.2 Percent in Fourth Quarter 2010

2011-01-28T16:01:00.000-06:00

The Bureau of Economic Analysis released its first estimate of how rapidly Gross Domestic Product grew in the fourth quarter of 2010 earlier today. The annualized rate of 3.2 percent marks the 6th straight quarter of growth. This ends a good year for the national economy, especially considering that the 2007-09 recession is fresh in our minds. If you recall, that many economists were worried about a double-dip recession in 2010. That talk has pretty well dissipated.
Also, as we discussed on Wednesday’s blog, personal consumption grew at 4.4 percent rate. This was actually higher than the 4 percent growth rate that was predicted.
What this means is the economy is on solid ground and should soon be providing those much needed jobs throughout 2011.

Welcome Back Shoppers!

2011-01-26T11:58:00.004-06:00

Although the Gross Domestic Product figures for the fourth quarter will not be released until Friday, economists are already predicting a solid bump based on personal consumption. According to 27 leading economists, consumer spending in the fourth quarter of 2010 jumped by 4 percent. This would make for six consecutive positive quarters and would mark the highest increase since 2006.
Economists cite a strong holiday shopping season and solid new car sales as reasons for the optimism. Additionally, the Consumer Confidence Index jumped 7.3 points in January (from 53.3 to 60.6, where 1985=100).
Taken together, all this information indicates that the consumer is finally spending again, which will help reverse the downward cycle we have experienced in recent years. As consumers demand more goods and services, employers will have to hire more workers to meet this demand. More hiring leads to more consumption, and the cycle continues.

The depths we experienced in the recession will likely keep the economy from feeling particularly strong for a while. A lot of hiring will have to occur before we can even begin to reach pre-recession levels, but if Friday’s GDP release does in fact include a good consumption figure we can feel confident that the economy is on the way back.

Beige Book Paints a Positive Picture

2010-12-02T11:13:00.000-06:00

The Federal Reserve just released the latest edition of its Summary of Commentary on Current Economic Conditions, better known as the “Beige Book.” The Beige Book is a collection of largely anecdotal information gathered by Federal Reserve Bank officials from business and market experts throughout the country. It is published eight times each year.
The latest report states that the economy in the Kansas City district (which includes western Missouri, Kansas, Nebraska, Wyoming, Colorado, Oklahoma, and northern New Mexico) grew at a strong pace in October and early November. Other districts with economies growing at a strong pace included New York, Richmond, Chicago and Minneapolis. The Boston, Cleveland, Atlanta, Dallas and San Francisco districts also grew, but at a more modest pace. Economic growth in the St. Louis and Philadelphia districts was described as mixed.
The growth in the Kansas City district was attributed to increased optimism from manufacturers and increased demand for energy and agriculture products produced in the region. On the down side, real estate and construction activity continued to languish in the district.
For more information on the Federal Reserve Bank’s Beige Book, click here.

Kansas City’s Real Estate Market Emerging Trends

2010-11-24T14:47:00.000-06:00

The Urban Land Institute (ULI) released its “2011 Emerging Trends in Real Estate” report last month. The report grades the country’s major metropolitan areas on investment and development opportunities. It is no surprise that very few markets are seen as “markets to watch.” Washington, D.C., New York, San Francisco and Austin top the list as the best markets for commercial/multifamily investment and development. Out of the largest 51 metros in the country, Kansas City ranked in the bottom third. ULI’s report considers Kansas City a “modestly poor” investment prospect and a poor development prospect.
In looking at the prospects for these large metros, it does appear that things fare better in the traditional big cities on the coasts, like New York, Los Angeles, San Francisco-San Jose and Washington, D.C. Texas metros appear to be emerging, as does Denver, but most of the non-coastal metros have poor prospects.
Kansas City has never really been a trendsetter when it comes to real estate prospects, but its poor showing in the ULI report is still somewhat concerning. Markets that are perceived as established or emerging global cities are attracting the real estate development and investment while the secondary markets are being overlooked. If this perception is not changed, the gap between the hot, trendy markets and colder, secondary markets will widen.

Are We Turning the Corner in Employment?

2010-11-08T10:23:00.002-06:00

October employment figures for the U.S. were released today to overall positive reviews. The most positive feature was the month-to-month increase in employment of 151,000 jobs nationwide. Public-sector jobs lost 8,000, but a stronger-than-expected increase of 159,000 in the private sector made for the first positive growth since May.
The National Bureau of Economic Research declared the 2007-09 recession over 16 months ago. Despite this passage of time, a very sluggish employment market keeps us feeling as if we are still in the recession’s grip. This leads us to wonder, how does this recovery compare to the 2001 recession in terms of employment?
The chart below shows month-over-month change in private employment for the 16-month period after the end of the 2001 recession compared to the 16 months after the 2007-09 recession. (We chose to focus on private employment since temporary census hiring and layoffs skewed the total figures, and growth in employment in the long-term will ultimately depend on private hiring.) Notice that the columns to the left are both negative for many months after recession’s end. This is typical, as employment is a lagging indicator. Employers will typically not start hiring until they are fairly certain the economy is on solid footing.
Somewhat surprising is the difference we see beginning about eight months after the end of each recession. Private employment has grown faster in the 2007-09 recovery than in the 2001 recovery. In the current recovery, monthly private employment change has been positive since December 2009. The 2001 recovery did not exhibit steady private employment growth until almost two years after the recession ended.
There are two important things to keep in mind, however. First, we are celebrating a total employment increase of only 151,000 nationwide. While encouraging, this increase did nothing to the overall unemployment rate, which stayed steady at 9.6 percent. Economists estimate that for the unemployment rate to go down, the U.S. economy would need to add at least 200,000 jobs a month. Second, the 2001 and 2007-09 recessions are very different animals. The 2001 recession saw a loss of almost 3 million private sector jobs, which was tame by comparison to the nearly 8.5 million lost in the 2007-09 recession. So with a much deeper loss in the most recent recession, it stands to reason that the recovery should be a bit more robust.
Regardless, the positive take away from this should be 10 consecutive months of private employment growth nationwide. Granted, the monthly growth figures could be higher, but 10 months still looks like a positive trend.

Housing Price Chart From “Central Standard”

2010-10-13T17:20:00.001-05:00

Below is the chart I referenced today on KCUR’s “Central Standard” program. The data comes from the Federal Housing Finance Agency. The chart shows how the housing values in these 6 metros all increased at relatively the same rate until about 2003. Then the housing bubble began to grow, especially in hot growth markets like Las Vegas and Miami and, to a lesser extent in Denver and Minneapolis-St. Paul. Kansas City, however maintained a stable rate of growth until the housing bubble burst in late 2007. During the recession in 2008 and early 2009 housing prices fell precipitously in those markets that saw huge increases in values just a few years earlier. In Kansas City, we did not experience the large increase, so consequently we did not experience a great home value collapse.
To close on a positive not, across all of these metros, it appears that the worst may be over. All are showing signs over the past few quarters that their home prices are stabilizing.

Area Unemployment Rate Remains Stubborn

2010-09-29T16:25:00.001-05:00

The unemployment rate for August, released today, sits at 8.8 percent for the second consecutive month. One year ago the rate was 8.9 percent. Although the economy is now officially in recovery mode (the National Bureau of Economic Research declared the recession over as of June 2008) we have yet to see a surge in employment. There remains a great deal of uncertainty in the economy. Businesses are not going to start hiring again until they are confident the economy is on solid ground. While economic figures like GDP were encouraging earlier in the year, the third quarter numbers are not expected to be as strong. This will likely forestall many employers’ hiring plans even further. Unfortunately, this is looking more and more like a very slow recovery.

Competition for Open Jobs Remains High

2010-08-23T15:39:00.001-05:00

For every job posting in the Kansas City area there are three unemployed persons, according to the job search site Indeed.com. Out of the top 50 metro areas, Kansas City ranks right in the middle at 25th. The best place to be looking for work according to the site was Washington, D.C., with one job posting for every one unemployed person. At the bottom of the list are Metro Detroit and the Miami area with eight unemployed persons for every job posting.

June Employment Numbers Released

2010-07-30T17:41:00.000-05:00

Kansas City’s unemployment rate edged up from 8.3 percent to 8.5 percent in between May and June. This is still better than the 8.9 percent rate we had one year ago.
We typically see a boost in employment and labor force during the summer months as students are looking for work. This is clearly the case this summer, as the labor force (the number of people who are employed or are actively looking for work) increased by nearly 11,500. Employment also increased, but by less than 9,000, thus leading to a higher unemployment rate.
Historically, June is the high point of the year for employment rates because of seasonal summer jobs. Hopefully that will not be the case this year. If the economic recovery gains some traction and we begin to see some real employment increases we can look forward to higher employment levels in the months to come.

May Unemployment Rates Released

2010-07-02T14:39:00.000-05:00

As much as we want the recession to be over and to be on a solid road to recovery, the sad fact is we are still a ways away from a strong economy, at least in terms of employment. Sure, April gave us reason to hope when the regional unemployment rate dropped from 9.3 percent to 8.3 percent. The number of people who were unemployed dropped by nearly 10,000 and actual number of people working climbed by nearly 12,000.
May’s numbers were released this week, and they were not bad, but they were not particularly good either. All variables (Labor Force, Employment, Unemployment and Unemployment Rate) leveled off instead of showing continued signs of improvement. The labor force increased by 213, unemployment decreased by 714, while employment grew by just 927. The unemployment rate remained unchanged at 8.3 percent.
Adding to this lackluster news is today’s release of the national employment numbers for June (remember the state and local figures will lag the national) indicating a net loss of 125,000 jobs. The loss of 225,000 temporary census jobs is largely to blame for the net decline. Were it not for the loss of these census jobs, the country would have added roughly 100,000 jobs. The bulk of these jobs (83,000) were in the private sector, but economy-wide, this increase barely makes a dent.

April Home Sales Figures are Strong

2010-05-21T10:40:00.000-05:00

The Kansas City Regional Association of Realtors released its April home sales figures this week, and there is reason for cautious optimism. April saw 2,644 home sales, an increase of 672 from April 2009. Even more encouraging is the fact that these homes’ average selling price was up by more than $5,000 from one year ago.
Additional good news is that the overall housing inventory has leveled off at around 16,500 homes. There were actually fewer homes for sale in April 2010 than April 2009. On average, it takes 7.4 months for a home to sell in the Kansas City area, down from eight months one year ago.
Overall, this is all good news so why the cautious optimism? Undoubtedly the ending of the Housing Tax Credit in April spurred much of the activity last month. It is likely that many potential homebuyers made their purchases in April to beat the deadline, so we might see that sales are down in May and June because so many buyers already jumped into the market. May’s figures will be very telling. If sales plummet, we can assume April was an anomaly caused by the tax credit. However, if sales remain strong, we might be seeing the beginnings of the housing market recovery that the economy has been yearning for since 2008.

Random Economic News

2010-05-17T08:33:00.000-05:00

There are a couple of positive economic notes in today’s news. RealtyTrac reports that nationwide foreclosures dropped 9 percent in March and an additional 2 percent in April compared to the previous month. Now that we are a good three years into the housing crisis, it would appear that foreclosures may have finally reached their peak and we will see foreclosure numbers continue to decline.
The negative effect of foreclosed properties on all surrounding properties is well documented. While this negative impact should begin to slowly mitigate as foreclosure numbers drop, it is still far too early to declare victory over the housing crisis. An estimated 25 percent of all homeowners still owe more on their homes than they are worth. It will likely take years before the housing market gets back to some semblance of normalcy — and before homeowners can once again feel their home is a valuable asset and not a net negative to their financial well being.
On the employment side, first time unemployment filings declined again for the fourth straight week. This news comes on the heels of a solid April job growth number of 290,000.
These are not giant leaps ahead for the economy, but they can be looked at as baby steps in the right direction.

http://money.cnn.com/2010/05/13/real_estate/april_foreclosures/index.htm?hpt=T2
http://money.cnn.com/2010/05/13/news/economy/initial_claims/index.htm

March Unemployment Figures Released

2010-04-28T15:46:00.000-05:00

Several signals in recent months have indicated that we are well on our way to economic recovery. Unfortunately we can’t include March’s employment data in that group. The Kansas City metro’s unemployment rate increased in March to 9.3 percent. This is an increase from 9.1 percent last month and 8.4 percent one year ago. The labor force (the count of all people who are either employed, or unemployed and are actively looking for work) declined to 1,025,298, the lowest figure since June of 2006. Meanwhile employment (the number of people who are employed) dropped to 930,131 — its lowest point since September 1996!
We can’t say these figures are a complete surprise. Employment is a lagging indicator, so we will not likely see employment growth until the recovery is deemed to be strong and sustainable. However, the fact that we have to go back to 1996 to see local employment at the same level we have today is still startling. These numbers really speak to the magnitude of the 2008-09 recession. Yes, we believe we are on our way to economic recovery, but it is certainly going to take a while, especially on the employment front.

$136 Million Investment in Fairfax Plant Announced

2010-04-21T12:55:00.000-05:00

General Motors CEO Edward Whitacre announced today that GM will be paying back the government loan it received last year four years ahead of schedule. Whitacre said much has changed at GM in the past year, and these changes have allowed them pay back the government and look forward to a brighter future.
This was certainly good economic news in itself, but the best news, at least for the Kansas City area, was Whitacre’s announcement that GM will invest $136 million in the Fairfax plant to make the next-generation Chevy Malibu. This investment will make Fairfax the primary manufacturer of the Malibu.
We have written much about the local auto manufacturing sector in this blog. Despite the severe downturn in this sector, Kansas City’s auto manufacturers have not only survived, but thrived. Last year, Fairfax added a third shift when there was speculation that it might lose jobs. The Claycomo plant continues to make two very popular models in Ford’s line. Now with news of today’s GM investment, we can say that auto manufacturing in Kansas City is one of the region’s economic bright spots.