the missouri economy where have we been? where are we? where are we going? dr. david mitchell,...
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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??
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