In a recent blog we wrote (with a great deal of hope) that the local employment figures in April might be the beginning of an economic turn-around. Well, May’s figures have crushed that hope.
Overall employment dipped by 3,429. This decline, coupled with an increase in the labor force (+5,892), sent the local unemployment rate to 5.5 percent (up from 4.6 percent in April).
It is important to keep in mind that local employment data can fluctuate dramatically from month to month. Even so, we look to these monthly figures for some sign that the local economy is beginning to recover from this slowdown. Unfortunately it appears we will have to keep looking.
Monday, July 21, 2008
Thursday, July 17, 2008
Gas Prices Take Their Toll on Area Consumers
July marked the first time ever that Kansas City area drivers put $4-a-gallon gasoline in their vehicles. As of this writing, the average cost of regular gasoline in the metro is $4.04 a gallon. Many residents have little choice but to pay this price to fuel their cars so they can get to and from work and run their errands.
It wasn’t that long ago that gasoline was around the $2-a-gallon mark (January 2007). The increased money going into the gas tanks has undoubtedly put the brakes on normal spending habits.
Kansas City residents, on average, are going to feel the pinch of gas prices a bit more due to the fact we have to drive a bit farther to get around than in other cities. According to the Center for Neighborhood Technology (www.cnt.org) the average Kansas City household drives 16,596 miles per year. At $4.04 a gallon this comes to over $3,300 in gasoline a year. Or looking at it another way, that’s over $1,600 more a year than we spent on gasoline at January 2007 prices. By comparison, Denver area residents are now spending approximately $2,800 a year in gas, or $1,400 more than when it was $2 a gallon.
The additional money going towards gasoline has to come from somewhere, and consumers are likely to cut back on discretionary spending to make up the difference. This is clearly dampening the economy, as consumers are looking for ways to save money rather than going out and spending it.
We will continue to research consumer spending and hope to have more information in the coming weeks.
It wasn’t that long ago that gasoline was around the $2-a-gallon mark (January 2007). The increased money going into the gas tanks has undoubtedly put the brakes on normal spending habits.
Kansas City residents, on average, are going to feel the pinch of gas prices a bit more due to the fact we have to drive a bit farther to get around than in other cities. According to the Center for Neighborhood Technology (www.cnt.org) the average Kansas City household drives 16,596 miles per year. At $4.04 a gallon this comes to over $3,300 in gasoline a year. Or looking at it another way, that’s over $1,600 more a year than we spent on gasoline at January 2007 prices. By comparison, Denver area residents are now spending approximately $2,800 a year in gas, or $1,400 more than when it was $2 a gallon.
The additional money going towards gasoline has to come from somewhere, and consumers are likely to cut back on discretionary spending to make up the difference. This is clearly dampening the economy, as consumers are looking for ways to save money rather than going out and spending it.
We will continue to research consumer spending and hope to have more information in the coming weeks.
Thursday, July 3, 2008
Foreign Exports from the Region Increase
The Kansas City Metropolitan Statistical Area (MSA) exported nearly $5.7 billion worth of goods to foreign countries in 2006. This marked a 16 percent increase from 2005. While $5.7 billion is a lot of money, this amounts to only 6.2 percent of the region’s gross regional product (GRP) in 2005 (the most recent GRP figure available). Exports make up larger percents of GRP in all of our peer metros except Denver and Omaha.
Canada is the largest destination for our goods, receiving nearly $1.8 billion worth of goods from the Kansas City metro area. Mexico is second with $852 million, followed by Japan, China and Taiwan.
With the weakened U.S. dollar, American-made goods are more attractive to foreign buyers. Kansas City’s auto manufacturers are likely to see at least some benefit from the weak dollar, but other metros with an even greater international reach are more likely to see their economies buoyed by foreign trade.
Kansas City’s top exporting industry is Transportation Equipment ($1.5 billion) followed by Crop Production ($1.2 billion), Chemicals ($827 million), Food and Kindred Products ($770 million) and Computer and Electronic Products ($844 million)Sources: US Department of Commerce, Bureau of Economic Analysis
Canada is the largest destination for our goods, receiving nearly $1.8 billion worth of goods from the Kansas City metro area. Mexico is second with $852 million, followed by Japan, China and Taiwan.
With the weakened U.S. dollar, American-made goods are more attractive to foreign buyers. Kansas City’s auto manufacturers are likely to see at least some benefit from the weak dollar, but other metros with an even greater international reach are more likely to see their economies buoyed by foreign trade.
Thursday, May 29, 2008
April Employment Numbers are Encouraging
Kansas City’s unemployment rate dropped nearly a whole point between March and April (from 5.5 percent to 4.6 percent) according to the Bureau of Labor Statistics. Overall employment grew by nearly 7,000 while the labor force declined 2,473. This is all certainly positive news, but remember — we are dealing with non-seasonally adjusted data at the metro level, so these figures need to be taken with a grain of salt. Historically the unemployment rate normally drops between March and April. Since 2000, the local unemployment rate has dropped about a half percent every April.
Source: Bureau of Labor Statistics
The chart above shows the recent unemployment rate trend since 2000. The red dots show the unemployment rate for each April. You can see that the April rate is typically in a valley, and in most instances is the lowest unemployment rate for the year. So, the nearly 1 percent drop in the unemployment rate is somewhat significant, but we will need more months of data to determine whether we are just seeing typical seasonal effects, or if we maybe seeing the beginning of a positive trend in employment.
What maybe more noteworthy about Kansas City’s April unemployment rate is its relationship with the national rate.
Source: Bureau of Labor StatisticsThe chart above shows the recent unemployment rate trend since 2000. The red dots show the unemployment rate for each April. You can see that the April rate is typically in a valley, and in most instances is the lowest unemployment rate for the year. So, the nearly 1 percent drop in the unemployment rate is somewhat significant, but we will need more months of data to determine whether we are just seeing typical seasonal effects, or if we maybe seeing the beginning of a positive trend in employment.
What maybe more noteworthy about Kansas City’s April unemployment rate is its relationship with the national rate.
Source: Bureau of Labor Statistics
Kansas City’s April rate of 4.6 percent was lower than the national rate of 4.8 percent. This marks the first time this has occurred since April 2003. It used to be that Kansas City’s unemployment rate was consistently lower than the U.S. rate, but we’ve been consistently higher the past five years (shown in yellow). We will keep an eye on this relationship to see if this is a one-month aberration, or a return to our normal pattern.
Kansas City’s April rate of 4.6 percent was lower than the national rate of 4.8 percent. This marks the first time this has occurred since April 2003. It used to be that Kansas City’s unemployment rate was consistently lower than the U.S. rate, but we’ve been consistently higher the past five years (shown in yellow). We will keep an eye on this relationship to see if this is a one-month aberration, or a return to our normal pattern.
Monday, April 28, 2008
Housing Market Hasn’t Bottomed Out Yet
Economy watchers have been keeping a close eye on housing statistics lately. It is no secret that the troubles in the housing market have contributed greatly to the overall economic woes we are now feeling. Real estate experts have been waiting (so far in vain) for the housing market to bottom out so the recovery — for housing and for the economy in general — can begin.
Nationally, seasonally adjusted sales figures for existing homes dropped 2 percent between February and March. Locally, existing home sales rose for the second consecutive month, but we normally expect that kind of increase at this time of year as housing activity usually picks up in the spring and summer months. In order to evaluate our local market more realistically, we applied the seasonal adjustments from the national data to our local data. This assumes that the Kansas City market experiences seasonal changes similar to the national housing market.
Nationally, seasonally adjusted sales figures for existing homes dropped 2 percent between February and March. Locally, existing home sales rose for the second consecutive month, but we normally expect that kind of increase at this time of year as housing activity usually picks up in the spring and summer months. In order to evaluate our local market more realistically, we applied the seasonal adjustments from the national data to our local data. This assumes that the Kansas City market experiences seasonal changes similar to the national housing market.
Using the seasonal adjustment, we see that existing home sales dropped 9 percent between February and March. So it would appear that the housing market (both nationally and locally) is still struggling to gain momentum.
The March numbers were not without some good news, however. Local housing supply (current inventory divided by number of sales) for new homes continued dropping to 12.8 months. It was 20.9 months in January. Existing home supply also declined slightly to 7.9 months. A good rule of thumb says a five-to-six month supply indicates a balanced market (below five is a seller’s market and above six is a buyer’s market).
Also, the average home sales price increased in March to $168,384. It had been decreasing over the past three months.
So with housing supply declining and average homes sale prices increasing, the stage is set for buyers who are trying to time the market to go ahead and buy homes. If enough buyers do that, hopefully the logjam will be broken. Families looking to move will be able to sell their existing homes and make their moves. Such a domino effect could see home values recover rather quickly, making homeowners more confident that their investment is sound. This renewed confidence is just what the general economy needs to start its recovery.
The March numbers were not without some good news, however. Local housing supply (current inventory divided by number of sales) for new homes continued dropping to 12.8 months. It was 20.9 months in January. Existing home supply also declined slightly to 7.9 months. A good rule of thumb says a five-to-six month supply indicates a balanced market (below five is a seller’s market and above six is a buyer’s market).
Also, the average home sales price increased in March to $168,384. It had been decreasing over the past three months.
So with housing supply declining and average homes sale prices increasing, the stage is set for buyers who are trying to time the market to go ahead and buy homes. If enough buyers do that, hopefully the logjam will be broken. Families looking to move will be able to sell their existing homes and make their moves. Such a domino effect could see home values recover rather quickly, making homeowners more confident that their investment is sound. This renewed confidence is just what the general economy needs to start its recovery.
Wednesday, April 2, 2008
Local February Employment Figures Don’t Show Much Change
The Bureau of Labor Statistics released local employment figures for February today. Overall, the numbers for Kansas City were fairly flat. Employment did decline by 1,812, but so did the number of unemployed, by 926. These equaled a total labor force decline of 2,738. The unemployment rate also declined slightly, from 5.4 percent in January to 5.3 percent in February.
Our local trends mirrored the national (CPS) figures from February in that employment, unemployment, unemployment rate and labor force all declined slightly.
For more information on the current employment picture, be sure to check out our employment section.
The Bureau of Labor Statistics released local employment figures for February today. Overall, the numbers for Kansas City were fairly flat. Employment did decline by 1,812, but so did the number of unemployed, by 926. These equaled a total labor force decline of 2,738. The unemployment rate also declined slightly, from 5.4 percent in January to 5.3 percent in February.
Our local trends mirrored the national (CPS) figures from February in that employment, unemployment, unemployment rate and labor force all declined slightly.
For more information on the current employment picture, be sure to check out our employment section.
Friday, March 14, 2008
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.
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.
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