Slowdown hits Joplin, tri-state area

Rick Willis' latte index shows a slowdown in the Joplin and tri-state area economy.

"The thing we've seen is where people may have came in and bought a large mocha, they are now buying a medium," said Willis, a coffee shop owner. "They haven't quit, but they've cut back."

Willis, the owner of Jive In Java, and other tri-state area business leaders say the recession is hurting economic activity in the tri-state region but not at the same rate as elsewhere in the nation.

"We've seen a little change but nothing to jump up and down about," he said.

According to the city of Joplin's monthly sales tax report, the city's 1 percent general sales tax - a measure of retail activity - declined almost 5 percent during the first four months of the city's 2009 fiscal year, which began in November 2008.

City sales tax data shows that Joplin's 1 percent general sales tax brought in $12.34 million in revenues in fiscal 2008, compared to $11.95 million in 2007. Those numbers represent taxable retail sales of more than $1.2 billion in 2008, compared to $1.19 billion in 2007. City officials expect a 2 percent increase in retail sales this year.

Still, some sectors remain strong, according to Doug Doll, president of Arvest Bank's Joplin region.

"Our business is still pretty solid," Doll said. "Probably right now the most promising segment of our building is residential lending. Because interest rates are lower, we are doing a ton of refinance activity."

Because of that, Doll said Arvest anticipated a record number of loan closings bankwide during February, though he didn't cite specific figures.

Doll said, however, that some local consumers are reluctant to buy new homes because of apprehension about employment stability - especially in manufacturing.

The unemployment rate - not seasonally adjusted - for the Joplin metropolitan statistical area increased to 5.7 percent in December, the latest figures available, compared to 5.3 percent in November and 4.4 percent in December 2007.

During a Feb. 6 earnings call for Joplin-based Empire District Electric Co., an analyst asked President and CEO Bill Gipson about the health of the Joplin-area economy, and Gipson noted that no plants have closed in Empire's service area.

"We've had some layoffs and some shifts where an industrial customer might have been performing at three shifts might have cut back to two and a half or two shifts," Gipson said on the call. "But again, we've not had a plant closing."

Gipson said the utility uses the amount of bad debt owed to the company to gauge the health of the local economy, and the amount of that debt on the electric side remains acceptable at about half of 1 percent of total revenues. Overall, Gipson said, Empire industrial customers - which generate about 15 percent of its revenue - reduced energy use by approximately 3 percent.

"We've seen some curtailment on energy use with building products manufacturers and a bit with poultry processing," he said.

Building permit data from the city of Joplin shows that commercial and multifamily residential construction remain strong, but it also reveals a drop in housing starts.

In January, the city issued only two permits for new home construction compared to 10 for the same month in 2008. From November through January, builders requested 11 permits valued at approximately $1.4 million - compared to 24 permits worth $3.5 million during the same period a year ago.

"Residential builders are struggling," said Crystal Harrington, executive officer of the Home Builders Association of Southwest Missouri. "They are doing remodeling, small commercial (projects), things they wouldn't normally do."

Tami Adams with Re/Max Classic, which operates real estate offices in Webb City and Carthage, characterized the tri-state area housing market as "so out of whack."

"The market has opened a bit, but I think it's going to be another nine months to a year before we see any kind of a rise," Adams said. While lower interest rates make it a good time to buy, "there's still a lot of crunching with lenders, though. I think it's going to be another year of struggling."

Apartment and business construction gains pushed the total value of Joplin building permits from $6.3 million for the first quarter of fiscal 2008 to $16.8 million for the first quarter of fiscal 2009.

Alan Buttram of Buttram Commercial Real Estate in Joplin said the commercial real estate business is tough, but some retailers are searching the tri-state market seeking affordable leases and property.

"I think there's a lot of a wait-and-see attitude in our economy right now and that translates into the real estate market," Buttram said. "That said, Joplin is still a good target."Jeff Wells is editor of Joplin Tri-State Business, SBJ's sister publication.