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.
Wednesday, April 21, 2010
Friday, April 2, 2010
Positive Economic News This Week
After two years of mostly dire economic news, three positive economic items released this week almost seems like an embarrassment of riches.
On Tuesday, the Conference Board announced that consumer confidence rebounded from a surprising dip in February. March’s index figure was 52.5, up from 46.4 in February. Consumer confidence had been increasing steadily between October 2009 and January 2010 before February’s drop.
Thursday’s bit of good news was a positive manufacturing report. The Institute for Supply Management’s manufacturing index rose for the eighth straight month in February. This index is based on a survey of purchasing managers and is seen as a reliable measure of manufacturers’ confidence in the economy.
And today, the Labor Department announced that the national economy added 162,000 jobs in March, the largest increase in three years. It is worth noting that an estimated 48,000 of those jobs are temporary Census jobs; still, the other 100,000-plus jobs will mark an end to the continuous job losses we experienced in 2008 and 2009. These new jobs did not lower the unemployment rate. It stands at 9.7 percent for the third straight month.
We will get updated employment data for the Kansas City area next week, on April 7, when February’s local data is released. March’s data will be released on April 28.
On Tuesday, the Conference Board announced that consumer confidence rebounded from a surprising dip in February. March’s index figure was 52.5, up from 46.4 in February. Consumer confidence had been increasing steadily between October 2009 and January 2010 before February’s drop.
Thursday’s bit of good news was a positive manufacturing report. The Institute for Supply Management’s manufacturing index rose for the eighth straight month in February. This index is based on a survey of purchasing managers and is seen as a reliable measure of manufacturers’ confidence in the economy.
And today, the Labor Department announced that the national economy added 162,000 jobs in March, the largest increase in three years. It is worth noting that an estimated 48,000 of those jobs are temporary Census jobs; still, the other 100,000-plus jobs will mark an end to the continuous job losses we experienced in 2008 and 2009. These new jobs did not lower the unemployment rate. It stands at 9.7 percent for the third straight month.
We will get updated employment data for the Kansas City area next week, on April 7, when February’s local data is released. March’s data will be released on April 28.
Monday, March 1, 2010
Kansas City Home Prices Expected to Continue Downward Trend
Kansas City home prices have not yet reached their low point according to a joint study from Moody’s and Fiserv. Kansas City home prices declined 1.3 percent between 3rd quarter 2008 and 3rd quarter 2009. The study predicts a further decline of 2.2 percent between 3rd quarter 2009 and 2010, and another 1.6 percent drop between 3rd quarter 2010 and2011.
Kansas City is not alone in this decline. The report indicates that all of our peer metros will also see some decline this year before showing signs of stability next year. Even though Kansas City’s housing prices appear to be stabilizing between the last two periods (-2.2 percent to -1.6 percent), the 1.6 percent decline will represent the greatest decline in values among the peer metros.
Among our peers, Minneapolis-St. Paul and Portland have seen the greatest drops in value. These declines are still tame compared to places like Miami, where prices will have dropped by a whopping 64 percent over the past three years.
Foreclosures continue to be the main cause for the declines. Foreclosure activity is expected to pick up in the spring, which will cause a flood of homes to enter the market, many at greatly reduced prices.
We have been looking for the housing market to stabilize and provide a steady foundation for a recovery for a while now. It is looking more and more like that will not happen anytime soon. Here in the Midwest, we can at least be thankful that our housing prices did not hyper-inflate as they did in many sunbelt states.
Thursday, January 28, 2010
Area Home Foreclosures Increased in 2009
RealtyTrac released its 2009 metro-level foreclosure activity report today. There is a definite “good news-bad news” angle to the Kansas City data. First, the bad news: there were more foreclosures in 2009 than there were in 2008. All told, 15,067 homes in the Greater Kansas City area had at least one foreclosure filing in 2009. This is an 11 percent increase from 2008 and a 50 percent increase over 2007. This represents 1.75 percent of housing units in the area, or one out of every 57 homes.
Now for the good news angle: the Kansas City area had fewer foreclosures than a lot of other areas, ranking 79th out of the largest 203 metros in the country in terms the percentage of homes in foreclosure. Our 1.75 percent rate falls well below the national average of 2.21 percent. Among our 9 peer metros, Kansas City ranks 5th on the list behind Salt Lake City (2.91 percent), Denver (2.78), Indianapolis (2.47), and Portland (2.26). Of our peers, Omaha had the lowest rate at .52 percent.
Las Vegas, Nev., was on top of this dubious list, with over 12 percent of its housing units — one out of every eight homes — in foreclosure in 2009. The top of the list was dominated by metros in the southwest and in Florida. In fact, 27 of the 30 metros with the highest foreclosure rates were in California, Nevada, Arizona or Florida.
Now for the good news angle: the Kansas City area had fewer foreclosures than a lot of other areas, ranking 79th out of the largest 203 metros in the country in terms the percentage of homes in foreclosure. Our 1.75 percent rate falls well below the national average of 2.21 percent. Among our 9 peer metros, Kansas City ranks 5th on the list behind Salt Lake City (2.91 percent), Denver (2.78), Indianapolis (2.47), and Portland (2.26). Of our peers, Omaha had the lowest rate at .52 percent.
Las Vegas, Nev., was on top of this dubious list, with over 12 percent of its housing units — one out of every eight homes — in foreclosure in 2009. The top of the list was dominated by metros in the southwest and in Florida. In fact, 27 of the 30 metros with the highest foreclosure rates were in California, Nevada, Arizona or Florida.
Tuesday, January 5, 2010
Metro Unemployment Rate Declines Slightly in November
Kansas City’s unemployment rate declined for the second straight month in November, although the decline was slight — from 8.4 percent to 8.3 percent. This is the lowest the local unemployment rate has been since April.
Looking under the surface we see that the decline occurred primarily because people dropped out of the labor force. The labor force dropped by 2,866, which overshadowed the decline in employment of 1,644. So even though there were fewer jobs, the unemployment rate dropped — because fewer people were participating in the workforce. For more on how the unemployment rates are calculated see our glossary. As we have mentioned before, we would prefer to see declining unemployment rates because employment is rising faster than the labor force.
By way of comparison, the national non-seasonally adjusted unemployment rate was 9.4 percent. (The adjusted unemployment rate was 10 percent. Since metro level seasonally adjusted unemployment rates are not available, we use the non-seasonally adjusted national figure for comparison.) Missouri’s unemployment rate rose to 9.2 percent from 8.9 percent in October. Kansas continues to have one of the lowest unemployment rates in the country at 6.2 percent.
Looking under the surface we see that the decline occurred primarily because people dropped out of the labor force. The labor force dropped by 2,866, which overshadowed the decline in employment of 1,644. So even though there were fewer jobs, the unemployment rate dropped — because fewer people were participating in the workforce. For more on how the unemployment rates are calculated see our glossary. As we have mentioned before, we would prefer to see declining unemployment rates because employment is rising faster than the labor force.
By way of comparison, the national non-seasonally adjusted unemployment rate was 9.4 percent. (The adjusted unemployment rate was 10 percent. Since metro level seasonally adjusted unemployment rates are not available, we use the non-seasonally adjusted national figure for comparison.) Missouri’s unemployment rate rose to 9.2 percent from 8.9 percent in October. Kansas continues to have one of the lowest unemployment rates in the country at 6.2 percent.
Wednesday, December 16, 2009
Local Housing Sector Shows Real Strength in November
According to data released today by the Kansas City Regional Association of Realtors (KCRAR) there were 2,454 home sales in the area this past November. This is sharp increase from November 2008 when only 1,518 homes sold. As Chart 1 shows below, home sales have remained steady after peaking in the summer months. In a typical year, home sales will dip in fall and winter as shown in chart 2. This dip is largely absent in 2009. It appears that incentives such as the first-time homebuyers program and low mortgage rates have buoyed home sales, even during what have traditionally been slow months.
CHART 1
CHART 2
The news is good not only in terms of homes sold, but also in rising prices. The average sale price was significantly higher last month, at $160,621 compared to $155,195 in November 2008. The figures are even more impressive for existing homes, where the average sale price jumped by nearly $12,000 from one year ago ($136,000 to $148,000).
All told, this is the best home sales news we have received in three years. Home sales are up (although they have a long way to go to get back to numbers we saw prior to the recession), sale prices are up, and inventory is down, as is the length of time it takes to sell a home.
Many economists, including ourselves, believe that a resurgent housing market is key to any economic recovery. If these November numbers truly signify a housing market on the rebound, then we can begin to feel more optimistic about the economy as a whole. It is possible that the federal homebuying programs are simply shifting future sales to the present. If so, while this relieves some of the current pent-up demand, sales next spring might not pick up as much as usual. Time will tell.
Friday, December 4, 2009
Kansas City’s Unemployment Rate Sees Significant Drop in October
The Kansas City area’s unemployment rate fell one half of a percentage point between October and September (8.9 percent to 8.4 percent). This is the first decline in unemployment since April. This is certainly good news as we look to put this recession behind us, but the story behind the numbers is not all that rosy.
The unemployment rate declined because the labor force declined significantly (by 6,146) while employment declined only slightly (414). This means while the number of jobs available is stable, the number of people looking for work has declined. We would prefer to see the unemployment rate decline because the number of available jobs has increased more than the increase in labor force, but considering where we have been, a lower unemployment rate and an apparent end to the huge job loss numbers — for whatever reason — is at least something to feel positive about.
PDF Version of the Map
The decline in unemployment rate that Kansas City experienced in October was not unique. Many metros across the country saw declines, especially in the New England states, upper Midwest and Michigan, where the recession has been particularly hard. The unemployment rate still increased between September and October in South Carolina, Ohio, Indiana, Illinois and many of the smaller metros in California.
PDF Version of the Map
Compared to last year, all metros saw an increase in unemployment rates. Kansas City’s rate jumped from 6.0 percent in 2008 to the current 8.4 percent. This increase places Kansas City right in the middle in terms of unemployment rate change. The greatest increases in employment rates were seen in parts of the south, the Great Lakes area and the Pacific coast states. The Midwest and Northeastern states had smaller increases.
The unemployment rate declined because the labor force declined significantly (by 6,146) while employment declined only slightly (414). This means while the number of jobs available is stable, the number of people looking for work has declined. We would prefer to see the unemployment rate decline because the number of available jobs has increased more than the increase in labor force, but considering where we have been, a lower unemployment rate and an apparent end to the huge job loss numbers — for whatever reason — is at least something to feel positive about.
Metro unemployment rates held a familiar pattern in October. The highest unemployment rates continued to be in the Southeast, Great Lakes region and in California and Oregon with the upper Midwest having the lowest unemployment rates in the country.
PDF Version of the MapThe decline in unemployment rate that Kansas City experienced in October was not unique. Many metros across the country saw declines, especially in the New England states, upper Midwest and Michigan, where the recession has been particularly hard. The unemployment rate still increased between September and October in South Carolina, Ohio, Indiana, Illinois and many of the smaller metros in California.
PDF Version of the Map
Compared to last year, all metros saw an increase in unemployment rates. Kansas City’s rate jumped from 6.0 percent in 2008 to the current 8.4 percent. This increase places Kansas City right in the middle in terms of unemployment rate change. The greatest increases in employment rates were seen in parts of the south, the Great Lakes area and the Pacific coast states. The Midwest and Northeastern states had smaller increases.
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