the missouri economy: in transition or decline? david m. mitchell associate professor –dept. of...
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The Missouri Economy:In Transition or Decline?
David M. MitchellAssociate Professor –Dept. of Economics
Director—Bureau of Economic Research and the Center for Economic Education
Missouri State University
The Missouri Economy in Brief Missouri United States
Population 1990 5,117,073 248,709,873 Population 2000 5,603,553 282,124,631 Population 2009 5,911,605 304,059,724
Personal Income (thds) $216,546,820 $12,225,589,000
Personal Income per capita $36,631 $40,208 Average Earnings per job $45,230 $50,259
Employment Jan 2000 2,876,695 136,559,000
Employment Nov 2007 2,867,391 146,665,000 Employment October 2009 2,718,303 138,275,000
Jobs lost in recession 149,088 8,390,000
Jobs gained in current decade -158,392 1,716,000
2009 Industry Employment (Percent)
Missouri United States LQ
Construction 4.7 4.8 0.98 Finance 6.0 5.9 1.01
Government 16.5 17.0 0.97 Information 2.3 2.2 1.07
Leisure 10.1 10.0 1.01 Durable Manufacturing 5.7 5.6 1.02
Manufacturing 9.7 9.1 1.06 Nondurable
Manufacturing 4.0 3.5 1.13 Professional/Business
Services 12.2 12.7 0.96 Other Services 4.3 4.1 1.05
Trade, Transportation, and Utilities 19.5 19.2 1.02
Missouri Regions and Major MSAs
United States and Missouri Housing Price Comparison
50
100
150
200
250
300
350
400
1980 1985 1990 1995 2000 2005
United States Housing Price Index (1980:1 = 100)Missouri Housing Price Index (1980:1 = 100)
Housing Price Index for Major Missouri Cities(1995:1 = 100)
80
100
120
140
160
180
200
1996 1998 2000 2002 2004 2006 2008
Springfield MSA St. LouisKansas City
Missouri SA Employment (HH survey)
1800000
2000000
2200000
2400000
2600000
2800000
3000000
1980 1985 1990 1995 2000 2005
Missouri Employment (SA)
1800000
2000000
2200000
2400000
2600000
2800000
3000000
1980 1985 1990 1995 2000 2005
May 1996
Missouri SA employment Jan 00 to Oct 09
2700000
2750000
2800000
2850000
2900000
00 01 02 03 04 05 06 07 08 09
Missouri Employment SA Jan 00 to Oct 09
2700000
2750000
2800000
2850000
2900000
00 01 02 03 04 05 06 07 08 09
Employment by City/Rural (Jan 1990 = 100)
90
100
110
120
130
140
90 92 94 96 98 00 02 04 06 08
St. LouisKansas City
Minor MSARural
Which MO Industries have lost jobs? Percent of job losses by Industry
Job Loss Comparison (Dec 07-Oct 09)
Mo Professional and Business Employment
200
220
240
260
280
300
320
340
360
90 92 94 96 98 00 02 04 06 08
Missouri Construction Employment
80
90
100
110
120
130
140
150
160
90 92 94 96 98 00 02 04 06 08
Missouri Manufacturing Employment
240
260
280
300
320
340
360
380
400
90 92 94 96 98 00 02 04 06 08
Change in Missouri Employment (Nov 2007 to Oct 2009)
Missouri Employment
Employment
-28,436 to -20,000
-20,000 to - 5,0000
-5,000 to - 2,500
-2,500 to -1,000
-1,000 to 0
0 to 500
500 to 1,060
US and Missouri Employment (Jan 2000 = 100)
94
96
98
100
102
104
106
108
00 01 02 03 04 05 06 07 08 09
Missouri US
Missouri Employment (Long Run)
Missouri Unemployment Rate by County
Missouri
Rate
5.0 - 6.0
6.0 - 8.0
8.0 - 10.0
10.0 - 12.0
12.0 - 14.0
Missouri Unemployment Rate by County
Missouri
Rate
5.0 - 6.0
6.0 - 8.0
8.0 - 10.0
10.0 - 12.0
12.0 - 14.0
Missouri Unemployment Rate (SA)
2
3
4
5
6
7
8
9
10
11
1980 1985 1990 1995 2000 2005
United States and Missouri Unemployment Rates Compared
2
3
4
5
6
7
8
9
10
11
1980 1985 1990 1995 2000 2005
US MO
Change in Real Taxable Sales 2006-2009 (YTD)
Missouri Taxable Sales
Dollar
-1.7 billion to -150 million
-150 million to -25 million
-25 million to - 10 million
-10 million to 0
0 to 10 million
10 million to 20 million
20 million +
Change in Real Taxable Sales (2006-2009 YTD)
Missouri Taxable Sales
Percent
-17.1 - -10.0
-10.0 - -5.0
-5.0 - 0.0
0.0 - 10.00
10.0 - 27.1
• Every lost job in Missouri diminishes taxable sales by $16,435 or decreases in sales tax revenue of approximately $1,477.
• Every job lost in Missouri diminishes total tax collections (income and sales tax) by about $3,600—therefore, we see a decrease of approximately $570 million. This does not include the decrease in gas tax, alcohol, etc. or the increase in costs for greater AFDC, food stamps, Medicaid, unemployment compensation, etc.
• Also, consider what employment would be at if we didn’t have the ‘bowl effect’ and had grown at the rate in the 1990s. Assume no recession, and employment would be 3,427,000 today—an additional 700,000 jobs or $2.5 billion in the state budget or an increased $11.5 billion in taxable sales compared to today.
• With the same percentage drop in the current recession? Employment would be 3,058,000 or an increase of 325,000 jobs compared to today—an additional $1.2 billion in the state budget or an increased $5.3 billion compared to today
Missouri Real Taxable Sales (SA)
1.00E+10
1.10E+10
1.20E+10
1.30E+10
1.40E+10
1.50E+10
1.60E+10
1.70E+10
1.80E+10
1.90E+10
90 92 94 96 98 00 02 04 06 08
Forecast of Missouri for 2010
• Based on US GDP growing at 2.1% and US unemployment rate of 9.6%
• Mo Employment will decline another 5,040 to 2.713 million
• Mo Unemployment Rate of 10.1%• Missouri Taxable Sales—flat• Missouri Tax Revenue—down 4%
Actual vs. Projected Missouri Personal Income(Sept. 2007 dollars)
Cumulative percent actual MO PI is below Projected PI
Growth of Missouri PI less Growth of US PI
-3
-2
-1
0
1
2
3
1970 1975 1980 1985 1990 1995 2000 2005
Missouri Gross State Product as a percent of US GDP
Missouri GSP (Real and Projected)
Cumulative percent actual MO GSP is below Projected GSP
Growth of Missouri GSP less Growth of US GDP
-5
-4
-3
-2
-1
0
1
2
3
65 70 75 80 85 90 95 00 05
US and Mo Employment Comparisons
90
100
110
120
130
140
150
160
170
1980 1985 1990 1995 2000 2005
US Employment Index (Jan 1976=100)Mo Employment Index
Actual and Projected Missouri Employment
1500000
2000000
2500000
3000000
3500000
4000000
4500000
5000000
1980 1985 1990 1995 2000 2005
Actual MO EmploymentProjected MO Employment
Difference between Projected and Actual Jobs
0
400000
800000
1200000
1600000
2000000
1980 1985 1990 1995 2000 2005
"Lost Jobs"
Growth of Missouri Employment less Growth of US EmploymentSeasonally Adjusted Year over Year
-3
-2
-1
0
1
2
1980 1985 1990 1995 2000 2005
Understanding the Problem
• The Missouri economy has been in a state of decline for over 50 years
• Had the Missouri economy grown at the same rate of the nation, its Gross State Product would be 35% larger than today.
• Furthermore, had the Missouri economy grown at the same rate as the nation, its Personal Income would be 20% larger than today
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