An economist with the Federal Reserve in Kansas City says our state economy is stabilizing amid a high unemployment rate.
Allison Felix is an economist with the Federal Reserve. She says there are positive and negative indicators when looking at the state’s economy as a whole.
Felix says Missouri’s unemployment rate is nearly in sync with the nation, with Missouri’s numbers at 9.3 and the country’s at 9.5.
Felix says unemployment does tend to be a lagging indicator, meaning as the economy starts to recover, the unemployment rate will continue to go up. She says it should start to level out and then go down the first or second quarter of next year, which will contstrain some consumer spending patterns.
Felix says she expects the state unemployment rate to continue to follow the same patterns as the national average.
On the upside, Felix says Missouri’s real estate market didn’t take as hard a hit as coastal regions or in more industrial states. She says it appears the housing market has hit bottom and is on the rebound and the last couple month’s data has been coming in positive.
Felix says the good news is that Missouri’s real estate market didn’t take as hard a hit as coastal regions or in more industrial states. She says when it comes to foreclosures, Missouri is outperforming the nation and that the Reserve’s last couple month’s data has been coming in positive for the real estate market.
"Whereas some states are seeing another wave of foreclosures as subprime mortages mature and those effected by unemployment in the first quarter fall behind payments, Missouri is doing better than most, she says.
"Housing doesn’t seem to be declining further," she says. "If we can keep increasing sales, if there is another wave of foreclosures, they may be able to sell them and we won’t be forcing them into foreclosure."
In the state’s retail market, consumer spending is still sluggish. Felix says data shows increases but a lot of that is reflecting the increase in gasoline prices and therefore an increase in spending.
The Cash for Clunkers program has had a noticible impact in sales statewide and nationwide, which will probably translate into higher consumer spending in the third quarter.
"A lot ofthe increases we’ve seen has been more on the price side, with gasoline going up, so consumers are spending more," she says.
"Labor, housing and constructions are the big ones," she says. "The manufacturing sector, auto industry is still struggling. The institute of Supply Management and the Federal Reserve of Kansas City — both reports have showed improvement over the past few months. Both say manufacturing is looking towards stabalizing."
Felix adds that jobs creation measures all have positive effects; putting people back to work also encourages consumer spending.
Jessica Machetta reports [Download/listen MP3]
