Signs of Hope: Statistics suggest local economy is on the brink of a rebound
Recent statistics from national entities, including the Federal Reserve and the National Retail Federation, seem to point toward a light at the end of this long recession tunnel. Local indicators suggest Springfield's economy is on the mend, too.
"A lot of the things I look for are employment figures," said David Mitchell, associate professor of economics and director of the Bureau of Economic Research at Missouri State University, adding that recent employment numbers in Springfield are improving.
"Employment has gone up here, whereas in the rest of the country, and actually in Missouri, it's still declining," he said.
Mitchell, who bases his numbers on data from the U.S. Bureau of Labor Statistics, said it appears Springfield entered the recession in early 2007, which was a little earlier than the rest of the country. At that point, he said, Springfield's employment numbers were approximately 212,000, noting he believes the low point was in June of this year, when employment was at 199,000."As of September, we're actually at about 200,600. So we've actually gained about 1,600 jobs," he said. "That's definitely a sign that things are, if not turning around, at least bottoming out, and I think it's kind of turned around for Springfield as a whole."
The Springfield unemployment rate, meanwhile, has slowly dipped from 8.5 percent in August to 8 percent in October, nonseasonally adjusted.
Another positive economy indicator is retail sales, Mitchell said.
Nationally, there are slight signs of improvement. In November, seasonally adjusted retail sales, minus automobiles, gas stations and restaurants, rose 0.6 percent compared to October, according to the National Retail Federation. Sales declined 0.8 percent when compared to November 2008.
Locally, there also has been a decrease - though economist Mitchell views it as a positive. In Springfield, Mitchell's analysis puts seasonally adjusted first-quarter sales at $1.3 billion, compared to $1.27 billion in the third quarter. In 2009, quarterly sales are declining at a rate of roughly 1 percent, Mitchell said, while in the early parts of 2007, sales were declining by nearly 3 percent.
"The decrease in retail sales is slowing way, way, way down. People were talking about how the economy was falling off a cliff. It's not falling off a cliff anymore. That rate of decrease has decreased," he said.
Some parts of the manufacturing industry also may be beginning to show signs of renewal. The Federal Reserve's latest Beige Book survey pointed to an increase in production in certain parts of manufacturing in the St. Louis district, which includes western and southern Missouri. The survey indicated manufacturers had reported increased production in food and beverage, furniture and packaging.
An increase in packaging production is a good sign, said Rita Needham, executive director of the Southwest Area Manufacturers Association.
"Packaging is often considered a barometer because if that business picks up, it means other people are making products," she said.
Packaging also is a fairly regional business, said Kevin Ausburn, chairman and CEO of Springfield-based SMC Packaging Group, which also has facilities in Kansas City and Little Rock, Ark.
Ausburn said the Springfield plant serves clients in southern and central Missouri, as well as northern Arkansas and southeast Kansas.
The bottoming-out period at SMC, he said, was between November 2008 and February. "Volumes dropped tremendously," Ausburn said.
One of the ways SMC measures its production is in terms of square-footage produced. An average year is about 500 million square feet produced, he said, noting that in 2009, he expects to fall between 8 percent and 10 percent short of the 500 million mark. Most of that is because of the sharp reduction in orders at the beginning of the year.
"We've been fortunate for the last six to nine months. We've seen activity slowly pick up, which makes us cautiously optimistic about 2010," he said.
A turnaround in the local economy would be welcome news to Matt Morrow, executive director of the Home Builders Association of Greater Springfield.
U.S. Department of Commerce statistics show 84,000 housing units were under construction in the Midwest at the end of November, which represents a 24 percent decrease compared to November 2008, when 111,000 housing units were under construction.
Local housing construction also has slowed, which is causing a rapid reduction in single-family home inventories, Morrow said. "We're closing on about twice as many homes as we're starting, which is painful, but necessary," he said.
That puts the five-county area of Greene, Christian, Taney, Stone and Barry on target to hit a projected demand for construction of new homes in first-quarter 2010, Morrow said. That projection was made during a housing forecast and market research update presented in September by the HBA of Greater Springfield and St. Louis-based Zanola Co. owner Joe Zanola.
"The big question is, what happens when demand is outpacing supply," Morrow said, pointing to financing and appraisals as factors in how quickly builders can begin meeting that demand.[[In-content Ad]]