by David Knight
Is everyone having fun watching the stock market roller coaster its way through September? It will be interesting to see how long people will patiently watch, believing that the market will rebound to soar to new all-time highs.
I am one to believe that everything will be OK. Many of you who know me are saying, so what, David's the eternal optimist. The following are some comments and observations on our local economy.
Finance. According to my sources, the fundamentals of our economy are sound. We are enjoying the longest peacetime recovery ever. We are experiencing low inflation, low interest rates (lowest since the '60s) and strong consumer demand for mortgages and automobile loans.
However we are entering a mature time in our economic cycle. At our economic peak there were plenty of customers to go around. Now competition is everywhere, and people are fighting for business and customers. Our local financial institutions have cut rates to unprecedented levels to do "the deals."
Small business is king. Lenders are all going after this market. Small business is a growth area for most financial institutions. They are all competing for a share of the small-business market. Changes in personal finance have forced banks to be more aggressive in lending to small business.
Ten years ago 50 percent of people's money was placed in traditional savings accounts. Today only 26 percent is in traditional deposits. Only 18 percent of personal wealth was in mutual funds 10 years ago; today 38 percent is in these funds, representing the single largest component in personal finance. Thus, the recent fluctuation in the stock market has grabbed the attention of millions of people who did not previously show such interest in the market.
Retail sales. As one drives around Springfield, one has to wonder how are all these new retail centers going to survive? The good news is retail sales grew this past year by more than 8 percent over the prior year. The prior year's retail sales growth was flat, putting concern into our city leaders.
Luckily retail sales have rebounded to just under $3 billion, providing $29.7 million in revenue to the city.
The cost of everyday goods in Springfield has not risen over last year. In fact, the cost of common goods went down (.03 percent) over last year. Leading the charge were bananas (-4.5 percent), white bread
(-15.9 percent) and sugar (-2 percent). Monthly expenditures rose (3.1 percent) over last year although gas prices were down (l 4.7 percent).
Leading the gainers were day-care costs (up 9.1 percent), repair service calls (6.7 percent) and apartment rent (3.3 percent). Springfield's cost of living index (94.7) remains very attractive compared to Kansas City (96.9), St Louis (99.2) and New York City (238.1).
Employment. Unemployment remains the lowest since 1974. Springfield's unemployment went below 4 percent in December 1995 and is at 3.2 percent today. We have 170,561 people in our labor force; 165,159 people are employed.
We have seen significant employment growth in the service, retail and transportation sectors. Manufacturing employment has risen 12.9 percent over the last five years. Our community can attribute this to a strong economy, growth of our existing manufacturing companies and a renewed commitment to manufacturing and job development.
People forget that it was community leadership that helped bring and expand Lily Tulip, Kraft, GTE and Dayco to our city. It is that same proactive response from today's leaders that has brought Contico, First Card and Unimark to Springfield.
We cannot afford to rest on successes of the past. Times change, economies change, industry needs change. We must [[In-content Ad]]
General aviation terminal expansion is set to wrap by August.