The Kansas City area’s unemployment rate jumped from 6.5 percent in December to 8.2 percent in January. This marks the highest unemployment rate since at least 1990. An increase was certainly expected as the national economy slides further and further into recession, but an increase of 1.7 percentage points in one month is still alarming. The Kansas City area can take some solace that it is not alone in such a huge jump. The national unemployment rate jumped from 7.1 percent to 8.5 percent, Missouri’s went from 7.0 percent to 8.7 percent and Kansas’ from 4.9 percent to 6.4 percent. Similar jumps were seen in metro areas across the country.
An increase in the unemployment rate can either arise from fewer people working or more people entering the labor force and looking for work. In January, the labor force was stable, implying that the large jump in the unemployment rate was caused by an equally large drop in the number of people in the region who had a job. In fact, total employment in the region declined 18,000 from December.
People often look at the employment picture as a quick measure of how the economy is doing. Certainly both are trending in the negative direction at this time. However, employment is typically a lagging economic indicator, meaning that the economy is going to show signs of improvement in other areas (GDP, consumption, housing) before we see improvements in employment.
Monday, March 23, 2009
Friday, February 6, 2009
Searching for that Silver Lining
Since we started KCeconomy about a year ago, most economic news has been decidedly bad, from the housing bubble to the financial market turmoil to massive employment losses. Until now, any sign that the economy has bottomed out has been difficult, if not impossible, to find. We at KCeconomy.com believe that the spark that ignited the current crisis — the housing market — will also be the first indicator to tell us when the economy is ready to recover. And we might finally be seeing some long-awaited signs that the housing market is ready to turn around and fire up a recovery.
The first sign? According to an article in today’s edition of The Kansas City Star, many economists are forecasting very low mortgage rates later this summer. These low rates, coupled with home prices that have fallen in recent months and years, will prompt people to enter the housing market. Because housing starts have fallen in recent years, relatively fewer new homes have been added to the housing inventory. All this would indicate that home prices might soon stabilize or even begin to increase again in the not too distant future.
The housing market is very important to economic recovery for many reasons. New home construction can provide quality jobs and investment in equipment and materials, which will boost the economy. But perhaps more importantly, home price stability could give consumers a much needed confidence boost. Even though we are still living in a tenuous labor environment, homeowners would at least be comforted to know that their most valuable physical asset, their home, will not continue to lose value.
Locally, we still see an eight-month inventory of homes on the market today. A balanced market should have a five- to six-month housing inventory. New housing permits are at their lowest point since we began tracking them in 1985. In December, only 136 new housing permits were issued metro-wide. An average December since 2000 would have seen over 730 permits.
We monitor housing local housing data as it comes available. We will continue to do so and look for that first hint of silver lining in the months ahead.
The first sign? According to an article in today’s edition of The Kansas City Star, many economists are forecasting very low mortgage rates later this summer. These low rates, coupled with home prices that have fallen in recent months and years, will prompt people to enter the housing market. Because housing starts have fallen in recent years, relatively fewer new homes have been added to the housing inventory. All this would indicate that home prices might soon stabilize or even begin to increase again in the not too distant future.
The housing market is very important to economic recovery for many reasons. New home construction can provide quality jobs and investment in equipment and materials, which will boost the economy. But perhaps more importantly, home price stability could give consumers a much needed confidence boost. Even though we are still living in a tenuous labor environment, homeowners would at least be comforted to know that their most valuable physical asset, their home, will not continue to lose value.
Locally, we still see an eight-month inventory of homes on the market today. A balanced market should have a five- to six-month housing inventory. New housing permits are at their lowest point since we began tracking them in 1985. In December, only 136 new housing permits were issued metro-wide. An average December since 2000 would have seen over 730 permits.
We monitor housing local housing data as it comes available. We will continue to do so and look for that first hint of silver lining in the months ahead.
Thursday, February 5, 2009
December Employment Numbers Released
The Bureau of Labor Statistics released the December 2008 local area employment figures yesterday. The Kansas City area’s unemployment rate surged to 6.5 percent, the highest point it has been since June 2004. The rate would have been even higher were it not for a 6,276 member drop in the area’s overall labor force. For more information on how the unemployment rate is calculated visit our glossary.
Despite the jump, the area unemployment rate is still lower than the nation’s (7.2 percent) and is right in the middle of the pack compared to other large metros. Of the 50 largest metros, Kansas City’s unemployment rate was the 28th highest. Detroit led the way at 10.6 percent and Riverside-San Bernardino was second-highest at 10.1 percent.
The lowest unemployment rates were in Salt Lake City (3.8 percent) and Oklahoma City (4.6 percent).
Despite the jump, the area unemployment rate is still lower than the nation’s (7.2 percent) and is right in the middle of the pack compared to other large metros. Of the 50 largest metros, Kansas City’s unemployment rate was the 28th highest. Detroit led the way at 10.6 percent and Riverside-San Bernardino was second-highest at 10.1 percent.
The lowest unemployment rates were in Salt Lake City (3.8 percent) and Oklahoma City (4.6 percent).
Tuesday, January 27, 2009
Major Job Cut Announcements Hit Kansas City Area
Last month we said good-bye to an economically dismal 2008 and held out hope for a better 2009.
Well, so far the economic news in 2009 has been far from hopeful. Perhaps the worst news, at least locally, came yesterday as Sprint-Nextel announced plans to eliminate 8,000 jobs by the end of March. Sprint was not alone in delivering gloomy news yesterday, as Caterpillar, Pfizer, Home Depot and ING also announced significant layoffs. So far this year more than 200,000 job cuts have been announced nationwide.
According to The Kansas City Star, about 2,000 of the jobs Sprint eliminates will be in the Kansas City area.
Speaking of Kansas City employment, the Bureau of Labor Statistics recently released data showing a loss of 8,900 jobs in the Kansas City area between November 2007 and November 2008. The Missouri side of the region accounted for 4,900 of those lost jobs, while 4,000 were on the Kansas side. Most of the job loss occurred in the Construction, Manufacturing and Trade, Transportation and Utilities sectors. Education and Health Service saw modest gains. For details, see the BLS news release.
Well, so far the economic news in 2009 has been far from hopeful. Perhaps the worst news, at least locally, came yesterday as Sprint-Nextel announced plans to eliminate 8,000 jobs by the end of March. Sprint was not alone in delivering gloomy news yesterday, as Caterpillar, Pfizer, Home Depot and ING also announced significant layoffs. So far this year more than 200,000 job cuts have been announced nationwide.
According to The Kansas City Star, about 2,000 of the jobs Sprint eliminates will be in the Kansas City area.
Speaking of Kansas City employment, the Bureau of Labor Statistics recently released data showing a loss of 8,900 jobs in the Kansas City area between November 2007 and November 2008. The Missouri side of the region accounted for 4,900 of those lost jobs, while 4,000 were on the Kansas side. Most of the job loss occurred in the Construction, Manufacturing and Trade, Transportation and Utilities sectors. Education and Health Service saw modest gains. For details, see the BLS news release.
Tuesday, January 20, 2009
Conference of Mayors Predicts Gloomy Employment Picture for 2009
The United States Conference of Mayors and the Council for the New American City recently released employment forecasts for all metropolitan areas across the country. Out of 363 metros, only two are projected to see employment rise in 2009 — St. George, Utah and McAllen-Edinburgh-Mission, Texas.
The Kansas City metro area is forecast to lose 20,100 jobs in 2009, or 2 percent of the regional total. This predicted decline is right on par with the national metro average, which would indicate that the impact of this recession will be approximately the same here as the nation overall. The decline also matches the projected employment loss from MARC’s 2009 economic forecast, which predicted just under 20,000 jobs lost in calendar year 2009.
The impact of this recession appears to be more focused on some Sunbelt metros. The Florida metros of Miami, Jacksonville and Tampa-St. Petersburg, along with Las Vegas, Nev. and San Jose, Calif., are among the large metros expected to see employment drop by 3 percent or more. Not coincidentally, these metros were also among the leaders in housing value growth. As a result, the popping of the housing bubble has had its greatest impact there.
The Kansas City metro area is forecast to lose 20,100 jobs in 2009, or 2 percent of the regional total. This predicted decline is right on par with the national metro average, which would indicate that the impact of this recession will be approximately the same here as the nation overall. The decline also matches the projected employment loss from MARC’s 2009 economic forecast, which predicted just under 20,000 jobs lost in calendar year 2009.
The impact of this recession appears to be more focused on some Sunbelt metros. The Florida metros of Miami, Jacksonville and Tampa-St. Petersburg, along with Las Vegas, Nev. and San Jose, Calif., are among the large metros expected to see employment drop by 3 percent or more. Not coincidentally, these metros were also among the leaders in housing value growth. As a result, the popping of the housing bubble has had its greatest impact there.
Thursday, January 15, 2009
Regional Foreclosures up 35 Percent in 2008
In 2008, 13,609 properties in the Kansas City entered into some stage of foreclosure. All told, this amounts to 1.56 percent of all properties in the metro and is a 35 percent increase from 2007. Kansas City ranked 49th out of the largest 100 metros.
Most of the high-foreclosure-rate metros were in the Western United States or the Sunbelt. Stockton, Calif., was the metro with the highest percentage of properties in foreclosure, at 9.46 percent, followed by Las Vegas (8.89 percent) and Riverside/San Bernardino (8.02 percent).
Many economists agree that a stable (or at least stabilizing) housing market is crucial to recovering from the recession. These foreclosure figures would indicate that recovery might still be a long way off.
Most of the high-foreclosure-rate metros were in the Western United States or the Sunbelt. Stockton, Calif., was the metro with the highest percentage of properties in foreclosure, at 9.46 percent, followed by Las Vegas (8.89 percent) and Riverside/San Bernardino (8.02 percent).
Many economists agree that a stable (or at least stabilizing) housing market is crucial to recovering from the recession. These foreclosure figures would indicate that recovery might still be a long way off.
Tuesday, December 30, 2008
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.
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.
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