2013 Economic Forecast Calls for Growth
by Jeff Pinkerton
MARC’s 2013 Economic Forecast was released this morning at the Greater Kansas City Chamber of Commerce. Overall, the forecast is positive, with growth in gross regional product, income and employment continuing at a slightly increased rate.
The region’s economy has been averaging a modest growth rate of around 2 percent over the past few years. With the national economy beginning to gain steam, the forecast calls for a local growth rate of 3.2 percent in 2013 and a robust 4.9 percent in 2014. Personal income follows a similar trend line in the forecast period.
Kansas City Area Economic Indicators
Annualized Growth Rates by Quarter
Employment (or the lack thereof) has been the key issue throughout this recovery. Employment has been growing very slowly since bottoming out in early 2010. The forecast calls for moderate employment growth to continue through 2013 and 2014.
The biggest local employment gains will be seen the services industry, especially in the health, administrative support and professional/technical fields.
Kansas City Area Employment By Industry Projections
This forecast has one rather large caveat attached to it. Congress will have to decide how to deal with the “fiscal cliff” over the next few months. If the pre-determined government spending cuts and tax hikes take effect, many economists believe it will send the national economy “over the cliff,” dropping into recession territory yet again.
In this scenario, our alternate model projects a six-month recession in early 2013. The economy would then begin to recover, growing at a solid pace by 2014. However, 2013 would be a lost year in terms of employment growth. In this environment, it is difficult to see Congress supporting a scenario that essentially allows the little momentum the economy has built up to go to waste.