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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.

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