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Kansas City’s Economy is Growing, but Not Keeping Pace with Peer Metros

April 1, 2019

To gauge our region’s economic progress, KC Rising partners compare the Kansas City metro economy to 30 peer metros on a variety of measures. KC Rising’s goal is for Kansas City to rank in the top 10 metros in each of these measures.

Beginning with this post, we will take a closer look at some of these metrics. Let’s start with perhaps the ultimate indicator of a healthy, growing economy: Gross Domestic Product (GDP). GDP is the total value of all finished goods and services produced in an economy in one year. In 2017, Kansas City’s GDP was $131 billion (in current dollars). Among our 30 peers we rank 20th. We clearly have some work to do to meet our goal.

The good news is we are growing. Between 2013 and 2017, the regional economy grew 6 percent in real (inflation-adjusted) dollars.

The bad news is, we are not growing nearly fast enough to compete with our peers. Over the same period, our peer group saw GDP growth of 12 percent. Only four metros (St. Louis, Virginia Beach, Memphis and Milwaukee) grew slower than we did.

So why is our GDP growth lagging? The reasons aren’t completely clear. The Kansas City region specializes in growth sectors like IT and Finance, and we’ve seen steady declines in employment in the information sector (think telecommunications), but that decline has been more than offset by growth in other sectors. We remain a strong transportation hub and we have done well at retaining most of our manufacturing jobs. But ultimately, GDP isn’t just about jobs – it measures the value of the goods and services the people who hold those jobs produce. Even though we have high employment numbers in some growth sectors, we have to ask ourselves whether those workers are producing new, high-value goods and services. Or, are we providing back-office support for other regions that are more innovative and productive? Other KCRising data suggests a strong correlation between innovation and economic growth.

GDP Chart 4_2019

GDP is an important and insightful metric to monitor, but it requires patience. Kansas City’s economy is huge. If our metro were its own country, it’s economy would be the 56th largest in the world. Even with a greater focus on innovation, picking up enough economic momentum to get closer to the top 10 will take time.

It’s important to also look at changes in other metrics where the needle can be moved a little faster, such as quality jobs, income, education and equity, and we’ll take a close look at some of those in upcoming posts. If we make bigger strides in these measures, our overall economy will also grow at a more robust pace.

 

About KC Rising: Founded in 2014, KC Rising works to strengthen the regional economy and foster inclusive prosperity by focusing on three economic drivers: trade, people and ideas. In 2019, KC Rising has introduced a new emphasis on three enablers of economic prosperity: policy, place and inclusion. KC Rising is led by the Civic Council of Greater Kansas City, the Kansas City Area Development Council, the Greater Kansas City Chamber of Commerce and the Mid-America Regional Council. For more information, visit http://www.kcrising.com

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