State's economic forecast clouded by job uncertainty

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"Recession, recession, recession" is the theme of the Missouri Department of Economic Development's discussion of the state's economic condition leaving the outlook for 2003 unclear. What state officials are saying is that the same sector that started the state recession manufacturing is being counted on to reverse it.|ret||ret||tab|

Missouri is one of about a dozen states still struggling, according to a study by Economy.com. Missouri's recession, in its 22nd month, is the state's longest downturn in recent decades, and DED Director Joe Driskill said indicators for a turnaround are scarce.|ret||ret||tab|

State data gathered in April led DED officials to believe that the recession would be over by now. "Unfortunately, we are not seeing signs of that economic recovery," Driskill said. "We are seeing some indications that the national economy is gaining strength, but Missouri's economy, particularly in the availability of jobs, continues to struggle."|ret||ret||tab|

Driskill points to the manufacturing sector, which has lost 33,100 jobs since the beginning of this recession in March 2001, as the root of these employment difficulties. On a whole, the state lost approximately 77,000 jobs during the same period.|ret||ret||tab|

"We believe the primary effect that started pulling Missouri's economy down was the loss of manufacturing activity," Driskill said. "Manufacturing jobs tend to be a bit higher paying and have a higher overall economic impact to our state than other jobs."|ret||ret||tab|

The Springfield region has felt the impact of such losses, with closures or downsizing by such companies as Fasco Industries, Hawker Power Systems Inc. and Sweetheart Cup Company. In all, about 2,800 local manufacturing positions were dropped over the last two years.|ret||ret||tab|

Springfield City Manager Tom Finnie underscores the significance of such activity and what it means to the local community.|ret||ret||tab|

"I think (manufacturing) is a critical part of our local economy, one that traditionally has paid better wages," he said.|ret||ret||tab|

Manufacturing makes up more than 20,000 of the Springfield Metropolitan Statistical Area's nearly 180,000 jobs, and it has an economic impact of more than $3 billion, according to Springfield Area Chamber of Commerce data. |ret||ret||tab|

Statewide, manufacturing accounts for about 13 percent of jobs in the state, but it produces close to one-third of the gross state product. Thus, a swing in manufacturing employment is needed before the state can pull out of the recession, Driskill said.|ret||ret||tab|

"We need to see an upturn in manufacturing activity in the state," Driskill added. "We think that would be a precursor to improvement in the economy."|ret||ret||tab|

Driskill said if manufacturing does not come through, the focus will be on the technology sector.|ret||ret||tab|

Springfield officials hope the Partnership Industrial Center West can aid in any manufacturing upturn; it is the city's focal point for manufacturing activity. |ret||ret||tab|

While two tenant announcements were made in 2002, the industrial park's progress has not met expectations so far, said Greg Williams, vice president of economic development for the Springfield chamber.|ret||ret||tab|

"Unfortunately, the economy dealt us a pretty good blow at about the same time period that we opened Partnership Industrial Center West, so there has been somewhat of a lull," he said. "In a good economy, we would have seen more announcements."|ret||ret||tab|

The difficulty is somewhat due to the national recession, though. Corporate decisions from outside of Springfield have impacted workers here such as the job losses, Williams said, and continue to affect future business decisions. |ret||ret||tab|

But Williams has noticed a positive trend in the last couple months that gives him hope for 2003.|ret||ret||tab|

"Companies are starting to plan ahead and they see good times coming again," Williams said. "Thus our level of prospect activity for both parks has increased noticeably. That is hopefully a good sign for 2003."|ret||ret||tab|

The chamber's prospect volume has historically been an indicator of the local economy's future, Williams added, leading him to believe several PIC West announcements will be made this year. |ret||ret||tab|

A turnaround would be timely, considering the chamber just began its Partnership for Prosperity program, which is pooling $1.74 million from area businesses to create 7,500 new jobs in the Springfield MSA.|ret||ret||tab|

Another indicator of an area's economic stability is its sales tax revenue. During this recession, Springfield's sales tax base has been flat, hovering around the $32 million mark annually. |ret||ret||tab|

Sales are up so far this fiscal year, as the city has received $16.69 million in sales tax revenues a 2.9 percent increase over the same period last year, according to the city's budgeting office. But city officials are not making projections for fiscal year end which is up in June until December sales figures are in from the state. Finnie said final projections will be announced in February.|ret||ret||tab|

National holiday sales have not been very good, however, with some reports showing only a 1 percent increase over last year. Finnie is hopeful December sales figures will bolster the local positive trend.|ret||ret||tab|

"Clearly, we're going to be part of the national economy, but I don't think it's affected us quite as hard as other parts of the country," he said.|ret||ret||tab|

Finnie said other cities, and even the state of Missouri, are experiencing losses in sales tax revenue. Springfield is not.|ret||ret||tab|

Positive signs during this recession, Driskill said, are continued low interest rates, and increased automobile and home sales.|ret||ret||tab|

However, low rates have not, as economists had hoped, produced enough spending to bring Missouri out of the recession. |ret||ret||tab|

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