February Employment Numbers Add to Economic Concerns

The national economy lost 63,000 jobs in February, the biggest loss in employment since March 2003. This dismal figure comes on the heels of a January job loss of 22,000 and adds more fuel to the fire for those who think that the economy has entered a recession.

We are still awaiting the local employment numbers for January (due out next week) and February (due in early April), but we can begin to speculate what our numbers might look like. Nationally, the greatest level of national job losses occurred in construction (39,000 losses), manufacturing (down by 52,000) and retail (34,000 losses), while health care (up by 37,000) and government (up by 38,000) added jobs to help soften the blow.

We expect that the same industries will see job losses locally as well, but proportionately, they won’t be as dramatic here as nationwide at least not in construction and manufacturing.

Why? First of all, nationwide construction losses can largely be blamed on the well documented housing crisis. In Kansas City, however the housing market did not experience the same kind bubble as elsewhere, so the local residential market, while slow, will not come to a complete standstill. (For more information on Kansas City and the current housing crisis see our special report). Also, non-residential construction activity has increased in recent years and has been able to absorb some of the losses from residential construction.

Second, as discussed in our January 17th entry, our two local auto manufacturers have received good news recently that should keep them producing cars well into the foreseeable future. Moreover, if we examine manufacturing employment trends in recent years, while manufactures have lost significant numbers of jobs nationally, locally the trend has been virtually flat. So in terms of construction and manufacturing, Kansas City should not see the same level of job losses.

Kansas City felt the full force of the 2001 recession because two industries where we were particularly vulnerable, transportation and information, were most impacted. If this 2008 downturn ends up being a recession, it is likely that this time, Kansas City will fare better than the rest of the nation.