More bad economic news to close out 2008

Economically speaking, 2009 cannot get here soon enough. We are about to close out one of the worst economic years in recent memory, but the release of two pieces of economic data today tells us that we need more than just a new calendar to make things better.
According to the Case-Shiller index, national home prices dropped 18 percent between October 2007 and October 2008. This marks the 27th consecutive month the index has declined. The continued decline is harmful in two ways. First, it keeps potential buyers from entering the housing market as they are waiting for prices to hit rock bottom before they purchase. Second, it undermines consumer confidence. Homeowners who are watching the value of their homes drop are less likely to go out and purchase new goods than they once were.
Which brings us to the second piece of bad news, the Conference Board's consumer confidence index hit an all-time low in December. Historically, about 70 percent of economic output is devoted to satisfying the demand for consumption, so this lack of consumer confidence means we will likely carry 2008's economic woes with us well into 2009.

Kansas City Employees: Are We Still More Productive?

Last month we released our newest report “Economic Growth: Comparing Metros, 2001-2006”. In that report we compared metro level Gross Domestic Product (GDP) among the top metros in the country. Today, we take one further step and look at GDP per employee. This should give us a reasonable proxy for employee productivity.

Historically we have claimed the average Kansas City worker is more productive than the national average. According to the 2006 data, this claim still holds. The average Kansas City area employee contributes $65,052.40 to the regions GDP. Nationally that figure is $63,335.48. However, when we compare Kansas City’s productivity to some of our peer metros, we are in the middle of the pack.

By comparison, each Denver area employee contributes nearly $10,000 more a year to its economy than do Kansas City area employees, on average.
Even more concerning is the change in productivity between 2001 and 2006. Kansas City slips behind the nation in terms of productivity growth over this period. If this trend continues, it puts our claim to being more productive than average in jeopardy.

So does this mean that Kansas City employees are getting lax? Are other metros employees working harder than us? No. It appears more likely that our recent productivity performance is tied to the type of industries we have here than our work habits, given that the the leaders in productivity are metros like San Jose, San Francisco, Seattle and Washington DC.

But this means that some of our peers have attracted or grown industries with greater numbers of “good jobs” than we have. What are those industries? Stay tuned for part 2.

October Employment Numbers Released

The Bureau of Labor Statistics (BLS) released October employment figures today. Nationwide, the unemployment rate increased from 6 percent in September to 6.1 percent in October, but unemployment rates actually decreased in our region:
· Down from 6.2 percent to 5.9 percent in the Kansas City Metro
· Down from 6.2 percent to 6.1 percent in Missouri
· Down from 4.8 percent to 4.5 percent in Kansas
Keep in mind these figures are subject to revision. Also, figures for one month do not constitute a trend.
In these times where we are all looking for a bit of good news, however, maybe this will be the start of a positive trend for the area. We will continue to monitor employment data and other indicators in the coming months.