Skip to content

KC Economy – Stability in a Sea of Uncertainty

November 3, 2017

We presented  the region’s 2018 Economic Forecast last week at The Greater Kansas City Chamber’s annual Economic Forecast Breakfast.  The economy is doing well with no sign of a recession in the foreseeable future.  Its steady pace since the end of the Great Recession makes it a beacon of stability with in a sea of uncertainty created by a combination of recent natural disasters and on-going national policy debates.  With growth rates near the economy’s potential, unemployment at a 16-year low, rising wages and no inflation, the economy is experiencing a rare “Goldilocks” moment.  KC’s economy is matching the U.S. economy stride for stride, growing at almost precisely the same rate, and will add 18,000 to 20,000 jobs per year over the next two years.  Yet matching average U.S. growth is no longer enough for the region to achieve its aspirations of being a top-tier metro.  Compared to its peers (defined as the 15 metros immediately larger and smaller than KC by population), KC is falling behind. Its growth in GDP, median household income and quality jobs—jobs that pay above the median wage or require education levels that give them a career path to that wage—ranks 19th, 24th, and 20th, respectively, among the 31 peers.  To address these challenges, civic leaders need to stay focused on improving the drivers of regional prosperity – trade, talented people, and innovation and entrepreneurship—which is the purpose KC Rising, a partnership of civic organizations involving hundreds of business, education and community volunteers.

The full text report can be found here.

Advertisements

Source of Metro Employment Growth Shifting East?

October 5, 2017

All told, the Kansas City MSA is in a good employment groove. On average, the metro has been adding about 25,000 new jobs a year since 2015. This stability is nice considering Kansas City employment growth has been something of a roller-coaster ride coming out of the recession. This suggests the economy is strong and adding jobs at a rate above our historic norms. But there is an interesting shift when you look at the sources of these jobs.

CH1 KC Trend
Source: Bureau of Labor Statistics (CES)

For a number of years, it was not uncommon for the Kansas side of the metro to be the job growth leader. In fact, from the January 2012 to January 2015, the Kansas side generated 56 percent of the metro’s total jobs. Since then, the Missouri side has seen employment growth surge while employment growth on the Kansas side slowed considerably.

Ch2 Shift

Source: Bureau of Labor Statistics (CES)

 

From September 2015 to September 2017, 78 percent of the metro’s employment growth was in Missouri. (This data is not seasonally adjusted so we need to use consistent months when calculating change to remove seasonal factors).

This local shift correlates with some significant changes at the state level. The chart below shows that statewide, Missouri and Kansas had similar annual employment growth from 2012 to 2014, with both adding somewhere between 15,000 and 25,000 new jobs a year This was impressive for Kansas, given that it has less than half of Missouri’s total population. Missouri employment started to spike in 2015, while Kansas saw employment growth begin to slow. Missouri has been adding about 50,000 new jobs a year lately while employment change has actually turned negative in Kansas.

Ch 3 State

Source: Bureau of Labor Statistics (CES)

 

There are several positive reasons why the Missouri side is leading in metro employment growth —  Cerner’s Bannister Campus and continued downtown redevelopment to name a few. Still, it is impossible to ignore the correlation between the local shift and the change in fortunes of the two states. Kansas ranked last in the nation in non-farm employment growth for the year ending in August, declining by 9,000 jobs, while Missouri ranked 14th, adding 52,300 jobs. Could Kansas-side businesses be so adversely affected just because the State is performing poorly? Sure, there could be some state government contracts that have been trimmed, but this doesn’t seem like a big enough reason for such a large shift. This is an important change in our region and one that doesn’t have a clear explanation based on data.

As we said at the beginning, Kansas City is adding jobs at a good pace. You have to look under the hood to see that Missouri’s hot streak is largely responsible. Imagine Kansas City’s job growth potential if both states were firing on all cylinders at the same time. We’d love to get your thoughts in the comments.

 

The data used for these charts can be found here.

KC economic growth slows, but past not as bad as thought

September 22, 2017

Kansas City’s economy grew by 1 percent between 2015 and 2016, according to the Bureau of Economic Analysis (BEA). That figure is just as unimpressive as it sounds. Of the 53 metros with at least 1 million people, this rate ranks us 38th.
As it has for the last three years, San Jose was home to the fastest growing economy at 5.9 percent. San Francisco, Raleigh, Austin and Seattle (all tech hubs, by the way) round out the top five cities for economic growth.
There was some good news for Kansas City, but as it turns out, it is old good news. This data included significant revisions to historic data. We have been somewhat disappointed in Kansas City’s GDP performance in recent years. It seemed like the local economy had some good momentum in terms of job and income growth, but the GDP numbers were just not reflecting it. As it turns out, our concerns may have been justified. The chart below shows the difference in Kansas City’s recent GDP growth in the current and previous releases.

GDP 2016 Chart 1

Looking at the revised data (in dark blue), Kansas City’s economy did not really begin to rebound from the recession until 2012. When it did begin to grow, it grew at a healthier rate than we previously thought. The chart below shows that it grew at a rate much closer to the national rate.

GDP 2016 Chart 2
This comparison puts the disappointing 1 percent growth rate in some perspective. The national economy has slowed, and KC has followed suit. Even though we are trending with the national economy, it is concerning that we have been growing more slowly over the last three years.
To say the global economy is in flux would be an understatement. What is becoming clear is that some regions will lead the next economy, and some will follow. Given our strength in key industry sectors, we believe that Kansas City has the potential to be one of the leaders. We must begin to understand the obstacles holding us back (see KC Rising)  so we can set a leading pace.

Amazon HQ2: The Case for Kansas City

September 21, 2017

Amazon set the economic development community abuzz recently by announcing its search for a new, second headquarters. This massive development would bring 50,000 good paying jobs ($100,000 annual wages on average) and $5 billion worth of development to the metro that Amazon chooses.

These are game changing numbers. For a little perspective, there are about 74,000 jobs in downtown Kansas City, Missouri (inside the loop and down to the crossroads). There are comparable numbers of jobs along the College Boulevard corridor.  Amazon HQ2 would, by itself, be the third-largest employment center in the metro.

Does Kansas City have a chance? PC magazine sure liked us. The New York Times did not.

We don’t know all the details of exactly what Amazon is looking for. In part, Amazon is looking for a city that can:

  • Supply a lot of talented workers.
  • Make it easy for those workers to get around (daily commutes and air travel).
  • Provide a business-friendly environment.

The Kansas City region is competing against many metros, and some would appear to be ahead of us on these particular issues. But there is one key metric where we more than hold our own.

Kansas City IS a tech hub.

Kansas City has a strong location quotient (LQ) of 1.43 in computer and math occupations. This means the share of our workforce employed in computer and math occupations is 43 percent larger than the US share. Out of the 53 metro areas with at least 1 million people, our computer and math LQ ranks 13th.

Amazon HQ2 Chart.png
SOURCE: Bureau of Labor Statistics

Even with this strong base, Kansas City will need to demonstrate a robust talent pipeline to supply enough workers to meet Amazon’s expectations. Yes, computer and math occupations are a relative strength for us, but we currently have just 44,000 workers with these jobs, and most of these workers are already gainfully employed. Amazon will need 50,000 more.

No metro has a bullpen of 50,000 tech workers just waiting for a call, so finding 50,000 talented new employees will be a challenge for all metros pursuing Amazon. This is an opportunity for Kansas City to propose some innovative ideas about how we will build a talent pipeline.

Amazon will look at other, more subjective, criteria as well. Issues like transit, air service and overall quality of life will all weigh heavily. On these topics, Kansas City can tout recent progress and current and future plans.

Landing such a big economic development prize might be a bit of a reach, but going through the process is still worthwhile. The new economy is tech based. Winning economies are going to be those that can grow and attract tech talent. The process we would go through to land 50,000 hi-tech Amazon employees would also increase our capacity to grow our tech workforce and enhance the success of our existing tech firms. Kansas City’s tech sector will benefit from this effort and the number of tech employees will grow, even if they don’t necessarily work for Amazon.

KCMO Leading the Charge in Regional Growth

May 25, 2017

fastest-growing-cities-16 Est

The data for all cities in the Kansas City Metro is available here.

KC’s Population Growth Suggests Strong Economy

March 24, 2017

The most recent population estimates show that the Kansas City MSA is picking up the pace population-wise.

The 14-county metro population now stands at 2,104,509. This is an increase of 90,774 since 2010. To give you some scale for that growth, we’ve essentially added the population of another Lee’s Summit over the past six years.

MSA Pop Growth 2016 Estimates
Source: U.S. Census Bureau

Kansas City’s growth has been fairly consistent. We saw annual growth of about 15,000 a year between 2013 and 2015, but that growth jumped to over 20,000 between 2015 and 2016. Again for scale, that was like adding a city the size of Raymore in one year.

What’s more encouraging is the makeup of this population growth. Population growth comes from two sources, natural growth and migration. Natural growth is a simple formula, births minus deaths. In the Kansas City metro we have seen natural growth holding steady at about 10,000 to 12,000 a year. Migration growth has two components, international and domestic. International migration into the Kansas City region has also been consistent in recent years (between 3,000 and 4,200 a year). Domestic migration has been more variable. Net domestic migration was very small in recent years, but it spiked in 2016 to 6,693.

2016 Estimates Components of Change
Source: U.S. Census Bureau

 

Domestic migration is important to look at because it can be indicative of a healthy economy. If people perceive more economic opportunities in a region, they are more likely to migrate there. A look at some of our peer metros shows that a positive net domestic migration is no guarantee. Metros like Austin, Nashville and Denver saw net domestic migration top 20,000 last year, while some metros like Cleveland and St. Louis saw declines.

2016 Domestic Migration
Source: U.S. Census Bureau

All told, there may not be a better economic indicator than population growth, particularly domestic migration. Yes, more people moving in means we need more housing, shops, roads, etc. but more importantly, seeing significant domestic migration means that more people are choosing to move to Kansas City from elsewhere in the country. This strongly suggests that they are finding good economic opportunities here. As we mentioned, migration figures can fluctuate greatly from year to year, but the most recent data shows a Kansas City population, and economy, on the rise.

KC Rising Metrics: Measuring Progress

March 1, 2017

Our KC Economy team from Mid-America Regional Council joined several hundred of our close friends on Tuesday, Feb. 28, to celebrate Year Two of KC Rising — a year that saw a growing momentum in a wide range of initiatives designed to strengthen our regional economy. KC Rising’s initiatives focus on three key economic drivers: Trade (in globally competitive sectors); Ideas (innovation and entrepreneurship); and People (human capital).

KC Rising’s goal is to move the Kansas City region into the top 10 among our 30 peer metros in three key measures we call the “Big Dots” — the number of quality jobs in the region, our gross regional product, and our median household income.

MARC is helping KC Rising track the region’s progress toward these three goals with a new website launched this week, www.kcrisingmetrics.org. The site provides detailed data for the three “Big Dots” and the systems and strategies behind them.

big-dots

Currently, the region ranks 15th among peer metros in GDP, 12th in quality jobs, and 12th in median household income. Each of those is higher than what you might expect by population (where, by design, KC ranks right in the middle of its peers at 16th). But in addition to the rank, our metrics look at the percentage change for each indicator. There, things aren’t so rosy with GDP and quality jobs; we held steady on our ranking, but didn’t grow as fast as our peers. Median Household Income tells a different story. There, we grew 9th fastest, up from 19th a year ago.

The website is organized in a bottom-up structure, with 13 regional initiatives (categorized under trade, ideas and people) that are helping to implement adopted strategies (measured by 10 primary indicators) that will help systems function better (measured by another set of 11 primary indicators), which should move the needle on the three “Big Dot” goals.

Use the links for each indicator to drill down and see the actual numbers for the last two years, find out which metro leads the pack, and see who we have to pass to get into the top 10.

It’s a wealth of data that we’ll continue to add to and update. We hope you’ll find the site a useful tool to track regional progress.

%d bloggers like this: