Yesterday, I had the pleasure of presenting to the Lee’s Summit Economic Development Council’s Civic Roundtable. We had a good discussion that focused on:
- understanding the changing global economy
- the Kansas City area’s economic trends and
- Lee’s Summit’s population and economic growth
Here is a copy of the presentation.
Earlier today, Frank Lenk, MARC’s director of research services, presented the economic forecast MARC prepares for the Greater Kansas City Chamber of Commerce each year. The forecast calls for the Kansas City area economy to add 19,000 jobs over the coming year, with economic output expected to grow about 2 percent. This rate of economic growth is currently sufficient to put downward pressure on unemployment and upward pressure on wages, resulting in rising prosperity that is more broadly shared. Productivity, measured as output per worker, has been flat or declining both locally and nationally, however, which may make future expansion of jobs and income more difficult.
“Not bad, but I expected so much more.”
No, that’s not a movie review, or a food critic’s take on a recent dining experience. It’s our reaction to the latest metro-level GDP numbers for Kansas City.
GDP (Gross Domestic Product) is the ultimate measure of how well an economy is doing. It is the sum of all economic activity within an economy in one year.
Kansas City’s economy grew by 1.5 percent between 2014 and 2015. That’s not bad, but certainly not great. The region has performed both better and worse than this in recent years (see the chart above), but 1.5 percent is somewhat disappointing because it doesn’t seem to capture the way the Kansas City economy feels right now. Employment is at an all-time high, incomes are rising, and construction activity appears to be on the rise, so 1.5 percent just doesn’t feel right. But the economy doesn’t really do “feelings” very well. It is a strict numbers game and our numbers are just, well… okay. What this tells us is that despite some recent economic wins, we still have a long way to go, especially when we look at how we are doing with respect to our peer metros. Of the 53 metro areas with a population of 1 million or more, our 1.5 percent growth rate ranks us at number 42. The metros towards the top of this list have been able find a balance between:
- A good business climate where companies can find the talent they need to grow.
- An opportunity-rich environment where people can find career options (and training) for quality jobs that can improve their lives.
- A vibrant community where people want to live and work.
We are not sounding an alarm here. Kansas City’s economy has come a long way in recent years and we are definitely in the race to be a strong competitor in the global economy. But the pace of the race is quickening, and we will need more than 1.5 percent growth to move up with the front-runners.
Here is a link to the data.
The median household income in Kansas City grew 6 percent between 2014 and 2015 according to the latest census data released this morning. Adjusted for inflation, our metro median income grew from $57,062 to $60,502.
These are good numbers to be sure, but even more impressive is the fact that this 6 percent increase ranks us 5th nationally among the 53 largest metros (those with a population of at least 1 million).
Source: US Census Bureau, American Community Survey
There was a lot of data released today and we will continue analyzing it. Stay tuned for more.
Kansas City is growing as a destination for international immigrants. Over the last five years more than 15,000 foreign born residents have come to call Kansas City home. In fact, international migration growth has accounted for virtually all of Kansas City’s net migration growth over the past five years, as the region saw net declines in domestic migration between 2010 and 2012.
Source: U.S. Census Bureau
While immigration helps keep our population growing, it can also be instrumental in boosting the economy. According to Inc. magazine, 13 percent of the U.S. population is foreign born, but this population accounts for over one-fourth of all new businesses. Fortune magazine tells us that more than 40 percent of Fortune 500 companies were founded by foreign-born individuals or their children.
The numbers ring true in Kansas City as well. Here, the foreign-born population is relatively small, just 6 percent of the total population, but this population accounts for 13 percent of all local small business owners.
Gateways KC is a new initiative designed to create a more welcoming community for immigrants and, as a result, strengthen the regional economy. The Kansas City metro area is one of 20 Gateways for Growth communities selected by a national partnership between the New American Economy and Welcoming America.
GatewaysKC will focus on:
- Creating a broader understanding of the economic value immigrants bring to our region.
- Helping postsecondary institutions attract foreign students and encourage students to stay in the community and create businesses and fill jobs after they graduate..
- Helping immigrants become more engaged in and contribute to civic life.
This week the U.S. Census Bureau released interesting statistics showing how much of every metro area’s total employment came from startup businesses in 2014. The Census Bureau defines startups as firms that have been established for less than one year at the time the data is collected. The data excludes self-employed workers and several other categories (details here).
How do we do compare to our 30 peer metros? Kansas City falls in the bottom third of the list, at 1.7 percent. That puts us on a par with Columbus, Virginia Beach, Richmond, Cincinnati and Indianapolis.
The region ranks slightly better than Baltimore and St. Louis (at 1.6 percent); Memphis, Milwaukee and Cleveland (1.5 percent); and Pittsburgh (1.4 percent). Those just ahead of us, at 1.9 percent, include Providence, Charlotte and Tampa.
Minneapolis not only tops our peer metro list, but also leads the Census Bureau’s list of top 20 metros in the country for job creation from startups as a percent of total employment.
The map below shows there is something of a geographical pattern to the data with lower startup employment in the Great Lakes region and generally higher rates in the South and West.
The startup employment percentage is only one example of the data available from the Census Bureau’s Business Dynamics Statistics, which provides annual statistics on establishments, firm startups, and job creation and loss from 1976 to 2014 by firm size, firm age, industrial sector, state and metropolitan statistical area. These statistics provide snapshots of current and historical U.S. entrepreneurial activity, plus geographic and industry detail about where jobs are being created and lost in the U.S. economy.
Official state economic growth numbers for 2015 were released last week from the Bureau of Economic Analysis. For our two states, the news wasn’t particularly good. Kansas’ Gross Domestic Product (GDP) declined at an annualized rate of 0.7 percent in the fourth quarter of 2015. It was one of seven states that saw their economies shrink. Several of those were other Midwestern states (Iowa, Nebraska, Oklahoma) with agriculture-heavy economies. The Kansas economy showed some strength in manufacturing, however, outpacing the nation in both durable and non-durable manufacturing. Missouri’s fortunes were a little better, growing at a 1.8 percent rate – slightly ahead of the national rate of 1.7 percent. Manufacturing, construction and healthcare were particularly strong in Missouri as each sector outpaced national rates.
We will not get official GDP numbers at the metro-level until September, but historically the Kansas City MSA’s growth rate has outpaced the two states.