- HOME
- NEWS
- SPORTS
- BUSINESS
- FYI/LIVING
- ENTERTAINMENT
- OPINION
- JOBS
- CARS
- REAL ESTATE
- RENTALS
- CLASSIFIEDS
- SHOPPING
- EXTRAS
'); } -->
On the same day the U.S. government confirmed that the national economy is growing again, Kansas City area business leaders heard that the region is recovering even faster.
But that’s like saying a tortoise is faster than a snail.
Even with the renewed growth, economist Frank Lenk said Thursday, the regional economy could take months to recover, and years to make up lost jobs.
The regional economy is likely to grow 2.4 percent in the next 12 months, according to the annual economic outlook from Lenk, the chief economist of the Mid-America Regional Council. That compares with 2 percent expected annual growth nationally.
While Lenk was making his forecast at a breakfast sponsored by the Greater Kansas City Chamber of Commerce, the Commerce Department was reporting that the national economy grew at a 3.5 percent rate in the third quarter.
That’s the first growth in gross domestic product in more than a year and could signal that the recession is over — a prospect that sent the Dow Jones and S&P 500 stock market indexes both up more than 2 percent Thursday.
But the sustainability of the GDP increase also was questioned because it was buoyed by stimulus spending, such as the Cash for Clunkers program and first-time home buyers’ tax credits.
“The challenge here is to get organic growth — growth that isn’t helped by fiscal steroids,” said Brian Bethune, economist at HIS Global Insight.
In contrast, Lenk said, the regional recovery will look better in part because the area’s economy didn’t decline as steeply, thanks to the area’s traditional stability, business diversity and conservative lending practices.
Lenk said the region’s recovery, when graphed, will look like a check mark, “a steep decline followed by a steady, though shallow, climb out of it.”
Lenk typically makes two forecasts. His more optimistic scenario this year was built on the assumption that the regional economy started growing again in the second quarter, one quarter ahead of the nation as a whole.
Under that scenario, Lenk said, the regional gross domestic product will push above its pre-recession peak by mid-2010.
In comparison, the national GDP won’t regain its pre-recession level until early 2011, Lenk’s report indicated.
But even in that scenario for the area, Lenk emphasized that job growth will lag output recovery.
He estimated that the region will lose a net 56,000 payroll jobs in this recession — far more than the 30,000-job loss he forecast last year.
“Between the fourth quarters of 2009 and 2010, the Kansas City area economy will gain only 4,000 jobs,” Lenk predicted.
A rebound in the job market could occur in 2011, with a possible growth of 33,000 jobs.
“Nonethless, it won’t be until 2012 that employment reaches the levels it had at the end of 2007,” according to his report, and it could be as late as 2013 under his slower-growth scenario.
Lenk’s best-case outlook expects a 4.3 percent drop in regional jobs from the fourth-quarter 2007 to second-quarter 2010.
It also calls for regional real personal income to decline 3.3 percent from its pre-recession peak and not surpass its fourth-quarter 2007 level until mid 2011.
If his more sluggish growth forecast occurs, it won’t be until the second quarter of 2011 that the regional economy grows beyond its pre-recession peak.
The more pessimistic scenario also says regional personal income won’t regain its pre-recession level until late 2011.
The Star’s Mark Davis contributed to this article. To reach Diane Stafford, call 816-234-4359 or send e-mail to stafford@kcstar.com. | Diane Stafford and wire services
@Nyx.CommentBody@