Survey forecasts rosy economy

Economic optimism is one of several key findings in Springfield Business Journal’s 2005 Economic Outlook Survey. More than 62 percent of respondents have a cheery disposition of the economic climate in Springfield and southwest Missouri, saying it is better today than it was one year ago. That is a vast improvement from the 47 percent who last year said that 2003 outperformed 2002.

Those positive results were bolstered when the Commerce Department reported Dec. 22 that gross domestic product increased 4 percent for the third quarter, up from 3.3 percent in the second quarter. The GDP growth rate – the output of goods and services produced by labor and property located in the United States – is on par with what survey respondents predict nationally for 2005. (See economic charts on pages 14–15.)

Sixty-five percent say the national economy is in better shape than it was a year ago, up from 58 percent in the 2004 survey. And the majority of respondents say local and national economies will grow at a 3 percent to 4 percent clip.

Why so rosy?

“I think the confidence level is better,” said H.W. “Bud” Godfrey, Bolivar’s economic development director, who is predicting as much as 6 percent growth locally.

Godfrey believes southwest Missouri will retain the title of Missouri’s economic engine – and Bolivar will play a significant part.

“We’re on the starting line and I think we’re getting ready to run,” Godfrey said, citing the new four-lane Highway 13 that connects Springfield and Kansas City and the imminent development along the highway. “Bolivar is going to be a good play economic-wise in the next five years.”

Other local optimism stems from southwest Missouri’s low cost of living, quality of life, tourism industry, medical facilities and utilities – all areas that are expected to play a role in local growth.

But the outlook is not as bright for the construction industry – historically a major cog in the region’s economic machine. A union labor leader said the local construction industry is being hampered by economic restraints.

“There is not nearly as many large construction projects coming out for bid as there are a lot of small ones,” said John Creller, business agent for the Bricklayers & Allied Craftworkers, Local 15, whose survey indicates the local economy is unchanged from last year. “That’s an indication to me that money is a little tighter, the big spending is not there.”

Creller, who serves on numerous construction industry boards, points to several large projects in 2002 and 2003, including new high schools in Ozark and Rogersville. He said there is a lack of funding today for large public projects. While public projects are ongoing at Springfield’s Parkview High School and the new Wilson’s Creek grade school in Battlefield, Creller said those plans would have been much bigger in years past.

“I think over the next four years, people will see more of a downturn in our economy, at least from our aspect – the amount of work for our people,” added Creller, citing the war in Iraq and other national political issues.

As a result, the local bricklayers union – 200 members strong – is cutting its new apprentice hires in half from 20 or more to 10, Creller said. “There’s just not enough work to do all that,” he said.

Positive spins

Work is plentiful in the diesel engine remanufacturing business, according to Lisa Hendrick, vice president of Diesel Exchange.

Her industry, remanufactured engines primarily for motor coach, military, oil well and construction industries, has seen a reverse trend from that of the local labor union.

“We went through a pretty slow time (in 2001 and 2002). 2004 was a pretty good year for us and I don’t really see any signs of it slowing down,” Hendrick said. “When the economy was down people tended to repair things and fix it as best they could. As the economy picks back up, then they have more money to do the complete remanufacture.”

Diesel Exchange predicts 11 percent to 15 percent sales growth in 2005, and early signs back that up. “People don’t necessarily need an engine right now, but (they wanted) to write some checks before the end of the year. That’s always a good sign,” she said. “We’ve been scurrying around to make some purchases that we normally wouldn’t make.”

Local Realtors hope to build on the boom years in 2003 and 2004. Real estate appraiser Kristine E. Bossert, owner of Ash Grove-based BAI Appraisal Service, sees a strong connection between the local economy and real estate activity. She predicts local economic growth will parallel real estate growth, typically 4 percent.

“We have an incredible development climate here in southwest Missouri. Each year we are putting in more and more commercial and residential development,” Bossert said.

She doesn’t expect development to slow, despite interest rates inching upward. Bossert expects interest rates to rise only 1 percent this year, after the prime rate “plateaus” at 6 percent probably by March.

“I would say they’ll probably pause it at 6 percent and see what the economy is going to do before they raise it again,” she said.