May 13, 2011
The Chamber’s 2011 Economic Update is out as of this morning, and as in all economic forecasts, there’s plenty to chew on, applaud or disagree with.
A key finding is that the region’s unemployment hole was far deeper than first thought. MARC had estimated metro job losses at 61,000 from peak to trough – that is, from the fourth quarter of 2007 to the first quarter of 2010. The estimate now, after revisions in federal workforce data, is half again as bad – 93,000 total jobs lost metro-wide. Significantly, these are not only hourly and salaried employees, but proprietors as well, as the Great Recession and its aftershocks took down small businesses while decimating workforces in larger firms.
In addition, while 2008 may have been the first stomach-levitating drop at the top of the roller coaster, and 2009 the screaming descent, what stands out was the unpleasantness of the bottom of the slope. 2010 was a flat-out lousy year for the area’s economy. While GMP (Gross Metropolitan Product) rose by 1.7% between Q4 2009 and Q4 2010, the U.S. economy as a whole grew 1.1% faster, with local job creation lagging even our sluggish GMP growth. Between Q4 2009 and Q4 2010, the forecast estimates that 700 net jobs were created metro-wide. In fairness, I should mention that from the actual bottom of the recession early in 2010 to the same Q4, the Kansas City MSA did add about 3,400 new jobs in all – better than the stat above might lead you to believe, but only about 10% of projected new jobs for 2012.
As in years past, the forecast splits the next two years into two possible outcomes – baseline and slow-growth. The latter rests on an assumption you’ll know all too well if you’ve had occasion to buy groceries or fill up the car recently – continuing political turmoil in the Middle and resulting high energy prices through the end of 2011. The Producer Price Index out on May 12th did show prices for finished goods up 0.8% during April, as fuel prices accounted for much of the month’s substantial increase in retail spending – not what America’s retail sector had in mind.
The good news, though is out there, and it’s substantial. Labor force totals from BLS show an additional 10,000 jobs added during February and March metrowide, and these totals are consistent with recovery trends seen in the past ten years. Better yet, the forecast calls for expansion in the metro economy at a 3.8% rate by the end of 2011, with regional expansion outstripping even national GDP growth during 2012. Job projections are positive as well, with 22,000 jobs created in 2011 and 32,000 in 2012. Energy costs will remain the biggest of several wild cards.
If’ you’d like to download your own free copy of the Economic Update (if you’re a Chamber Member, that is), then head on over to the Chamber Store on our website.