YOUR BUSINESS AUTHORITY
Springfield, MO
YOUR BUSINESS AUTHORITY
Springfield, MO
Despite a persistent inflation rate that hovers around 3%, an economist speaking Feb. 26 at a manufacturing industry conference in Branson said strong gross domestic product activity last year should remain in 2025.
Hiring also should be on the uptick nationally this year, said Kurt Rankin, a senior economist with Pittsburgh, Pennsylvania-based PNC Financial Services Group Inc. (NYSE: PNC). Rankin’s economic outlook presentation was among over 20 sessions from speakers at the fourth annual Midwest Manufacturers Trade Show & Conference, held Feb. 25-26 at the Branson Convention Center.
The Missouri Association of Manufacturers organizes the annual event, which this year included welcome remarks from Gov. Mike Kehoe.
Rankin said personal consumption expenditures make up roughly 70% of the nation’s GDP, which he noted increased throughout 2024. Real GDP was up at an annual rate of 2.3% in Q4, according to the U.S. Bureau of Economic Analysis. That followed a third-quarter increase of 3.1%.
While Rankin expects GDP growth to dip below 2% for this year’s first quarter, every subsequent quarter looks to be higher.
“As long as consumers are spending money, the U.S. economy is healthy,” he said. “It doesn’t matter whether China’s economy is slowing down, whether Germany’s in recession; those things don’t push upstream to affect the U.S. economy. We’ve got a slowdown in 2025, but a gradual reacceleration throughout the year.”
That’s not to say consumers currently have an overly optimistic mood toward the economy, based on The Conference Board’s Consumer Confidence Index for February. The index fell to 98.3, a third-straight month to decrease and the largest monthly decline since August 2021, as expectations rose for inflation in the year ahead.
Rankin acknowledged the drop in confidence but said consumers are still spending money, noting that GDP growth of around 2% is a pace that can be sustained.
Noting it takes around 12-18 months to have widespread economic impact, he said the interest rate cuts last year by the Federal Reserve should support strengthening gains through the remainder of 2025.
“We’re forecasting that the Federal Reserve is now going to cut interest rates based on that stable growth two more times this year,” he said, noting the current benchmark federal funds rate remains at 4.25%-4.5%. “We don’t have much relief expected on interest rates.”
The cuts, both projected for a quarter of a percentage point, are expected in June and September, Rankin said.
In labor
The labor force participation rate has bounced back from the start of the COVID-19 pandemic, when it dropped to 60.1% in April 2020. However, Rankin said it doesn’t appear likely to rise above the 62%-63% range where it has floated the past couple years.
“There are no more workers to draw back into the economy for any industry to say, ‘OK, I don’t have to offer this higher raise to either keep my current talent or to attract talent from other businesses or my competitors,’” he said, noting wage growth is going to remain strong.
Wage growth nationally for private industry workers finished up 3.7% for the 12-month period ending in December 2024, according to BLS data.
SWI Industrial Solutions Inc., which has plants in Springfield, Marshfield and Monett, is in hiring mode, said General Manager Dave Dunn. The nonprofit works with local and national companies such as 3M (NYSE: MMM), McCormick & Co. Inc. (NYSE: MKC) and O’Reilly Automotive Inc. (Nasdaq: ORLY) on projects such as manufacturing and light assembly and packaging work. SWI, which employs individuals with either intellectual or developmental disabilities, along with support employees, was among roughly 140 exhibitors at the two-day conference in Branson.
“We can take 20 more [workers] easy,” Dunn said, adding the company is nearing 300 employees. “Between our three locations, probably even more.”
Larry Simons, logistics and warehouse manager, said SWI’s workload is largely dictated by the needs of the companies it works with.
“If they’re busy, we’re busy,” he said, noting SWI has a backlog of work extending into May. “We are busy in all the locations right now.”
Dunn said the company’s annual revenue is roughly $11 million, a total that has increased in recent years since it acquired sheltered workshops in Marshfield in 2020 and Monett in 2023. Prior to then, revenue generally ranged $7 million-$9 million.
Another manufacturing company exhibitor at the conference, AC Component Specialists Inc., is coming off a near record-setting year for revenue in 2024, said Eric Tillman, shop manager. The 1996-founded Marshfield company remanufactures compressors used in air conditioning and refrigeration.
“Last year was amazing for us. We had one of our biggest years since the company started,” Tillman said. “We had expanded our product offerings.”
While declining to disclose last year’s revenue, he said the eight-employee company averages $2 million-$3 million a year.
Tillman said business slowed late last year around the time of the election but added it appears to be a short-lived setback.
“People were worried about the economy with the new administration and stuff coming in,” he said. “You can definitely see it ramping back up now. I think they’re feeling maybe a little more at ease.”
Hiring boost
Citing BLS data, Rankin said hiring in the manufacturing industry for 2024 was up over 1% year-over-year in Missouri.
“Missouri being right here around this 1% in terms of manufacturing, it’d be nice to be stronger, but we’re coming off weakness in the manufacturing sector,” he said.
While Arkansas had a greater increase at more than 2%, the jobs total for Missouri was better than other border states, such as Illinois, Kansas and Oklahoma, which all experienced a drop last year.
Between 2019-23, the Show Me State has added over 9,600 jobs – a 3.5% increase, according to Washington, D.C.-based Economic Innovation Group, a bipartisan public policy organization.
Revisiting the consumer confidence levels, Rankin said he takes them “at the very least with a grain of salt.”
“People like to complain. They like to gripe about things costing more, but they’re going to spend money,” he said. “They’re going to find a way to do so. So, unless there’s a reason why they can’t spend that money, that money being spent is going to support the economy because we’ve got wage growth above inflation.
“When inflation was low prior to the pandemic, the Fed was having trouble getting inflation up to 2%,” he said. “Inflation was 1.5%. The wage growth was 1.8%, but it was above inflation. That context, that comparison always matters.”
Springfield-based Small Batch expects growth in sales as they target a national, local market.
