The Missouri Economy Where have we been? Where are we? Where are we going? Dr. David Mitchell, Director Bureau of Economic Research Missouri State University.

The Missouri EconomyWhere have we been?

Where are we?Where are we going?

Dr. David Mitchell, Director

Bureau of Economic Research

Missouri State University

The Missouri Economy is worse than you think

But not for the reasons that you think!

The Cause? Housing Prices?

100000

150000

200000

250000

300000

65 70 75 80 85 90 95 00 05

Year over year change in Housing Prices

-20

-16

-12

-8

-4

0

4

8

12

16

65 70 75 80 85 90 95 00 05

Year over year change in quarterly GDP

-5

0

5

10

15

50 55 60 65 70 75 80 85 90 95 00 05

Year over year change in quarterly GDP

-4

-2

0

2

4

6

90 92 94 96 98 00 02 04 06 08

US Unemployment Rate

3

4

5

6

7

8

9

10

11

1970 1975 1980 1985 1990 1995 2000 2005

9.8%July 1983

Percent of unemployed who are unemployed longer than 27 weeks

0

4

8

12

16

20

24

28

32

36

50 55 60 65 70 75 80 85 90 95 00 05

35.6%

The ‘True’ Unemployment Rate

6

7

8

9

10

11

12

13

14

1994 1996 1998 2000 2002 2004 2006 2008

13%

Percent of employed who are working only part time

13

14

15

16

17

18

19

20

1970 1975 1980 1985 1990 1995 2000 2005

Percent of Employees who want Full Time Work

2

3

4

5

6

7

60 65 70 75 80 85 90 95 00 05

US Employment (Real and Hypothetical)

100,000

110,000

120,000

130,000

140,000

150,000

160,000

US Employment Employment (No recession)

US Employment (Real and Hypothetical)

US Employment (Real and Hypothetical)

US Employment—How long to get back to where we were?

US Employment—How long to get back to where we were?

Recession Comparisons of Employment

Which US Industries have lost jobs? Percent of job losses by Industry

US Historical Professional and Business Employment

0

4000

8000

12000

16000

20000

50 55 60 65 70 75 80 85 90 95 00 05

US Historical Construction Employment

2000

3000

4000

5000

6000

7000

8000

50 55 60 65 70 75 80 85 90 95 00 05

US Historical Manufacturing Employment

11000

12000

13000

14000

15000

16000

17000

18000

19000

20000

50 55 60 65 70 75 80 85 90 95 00 05

Sept. 1941

Unemployment Rate

4.2 - 6.0

6.0 - 7.9

7.9 - 9.8

9.8 - 11.5

11.5 - 13.5

13.5 - 15.3

Job Loss Comparison (Dec 07-Sep 09)

Missouri Employment (SA)

1800000

2000000

2200000

2400000

2600000

2800000

3000000

1980 1985 1990 1995 2000 2005

2.733 millionJune 1996

Which MO Industries have lost jobs? Percent of job losses by Industry

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

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

2007-2009 Percent Change in Missouri Taxable Sales

Change in Taxable Sales

Percent

-18.3 - -10.0

-9.9 - -5.0

-4.9 - 0.0

0.1 - 5.0

5.0 - 10.4

What does the decline in employment cost the state of Missouri’s budget?

• How much would tax revenue be with full employment?• 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

Economic Growth Comparisons

Questions??