Riding the economic roller coaster

Monday, December 31, 2007
A long line waited to get into Target on Black Friday in Cape Girardeau. Retail sales remained strong in 2007.

2007 saw ups and downs in Southeast Missouri

Strong retail sales helped offset slumping auto sales and a sluggish housing market in Southeast Missouri in 2007, with consumers putting off big-ticket purchases amid rising gas prices and uncertain interest rates.

The outlook for 2008 is clouded, an economist and business leaders said. But they added that elements of the local economy that shield the region from the major swings felt in other regions should help cushion any serious shocks.

"The Cape Girardeau economy has momentum," said Dr. Bruce Domazlicky, a Southeast Missouri State University economist who takes a quarterly reading of economic indicators throughout the region. "Health care and education aren't as affected as much. As the economy slows down, people are still going to go to the doctor and still go to school."

Most counties in the region from St. Francois County to Cape Girardeau County and south to the Bootheel saw moderate job gains over the first nine months of the year, according to figures from the Missouri Department of Economic Development. The gains, however, were not enough to offset an expanding workforce and unemployment rose in almost every county in the region during 2007.

Unemployment in September ranged from 4.4 percent in Cape Girardeau County to 7.1 percent in New Madrid County.

But total taxable retail sales excluding automobiles in Cape Girardeau County showed better than average growth, as tracked through the county's tax receipts. Through the first 11 months of the year, revenue rose 5.21 percent, a growth rate a full percentage point higher than a year ago at this time.

The figures show Cape Girardeau County's success as a retail hub, said David Ludwig, county auditor and budget officer. "People are feeling good about buying and upgrading of electronics," he said. "It has a good feel about it. If you go around the malls and shopping centers, people are walking around with bags of items they have purchased, they are not just window shopping."

But the uncertainties are also playing a part in the economic mix. From Cape Girardeau south to the Arkansas border, 2,300 manufacturing jobs have been lost in the past two years, J. Mike Seabaugh, business retention coordinator for the Workforce Investment Board, told the assembled board members in November.

Property foreclosures in Cape Girardeau County through the end of November totaled 129, up 37 percent compared to the full 12 months of 2006. Other figures show a decline in the number of residential building permits in Cape Girardeau and a decline in the number of lots in new subdivisions recorded by developers.

Car sales are also a source of concern. Through the first 10 months of the year, many car dealers in the region were struggling to match their 2006 sales and most were on a pace that would fall short of the strong sales achieved in 2005.

With the ease of price comparisons on the Internet, dealers are pushing to keep their share of the market, whether by beating the price or offering extras in the service department. "It is important to be getting your market share," Shane Morris, general manager at Coad Toyota of Cape Girardeau, said in October.

New employers taking on hundreds of workers helped buoy the economy in several towns of the region in 2007. National Assets Recovery Services, or NARS, opened a call center in Cape Girardeau that employed more than 400 people by October and managers were planning to add up to 100 more positions by the end of the year. In Ste. Genevieve, Holcim (US) Inc. is building a cement plant that kept 1,200 construction workers occupied and is expected to employ about 200 people permanently with a payroll of $10 million annually by mid-2009.

Those job gains, however, were at least partially offset by manufacturing losses. Dana Corp., going through bankruptcy, shut its doors in Cape Girardeau, putting out of work 200 union employees with high wages.

Gas prices and housing construction are wild cards in the mix that will determine whether the regional economy plods along or makes strong gains in 2008, said John Mehner, president and CEO of the Cape Girardeau Area Chamber of Commerce.

"Obviously you are going to have years that are catch-up years, where people are building fewer homes or those that are built are in the mix for a while," Mehner said. "I don't have a crystal ball on housing. For a lot of those things, I look to the national economy."

Mehner cited many bright spots for the area in 2007, from the Mid-South Wire Co. decision to locate a plant in Scott City that will eventually employ 60 or more people and the Signature Packaging Inc. plant in Jackson, adding 40 jobs.

The return of scheduled commercial passenger service at Cape Girardeau Regional Airport was a plus for the end of the year, as was the announcement that Schaefer's Electrical Enclosures Inc. would relocate to the old Dana Corp. building, bringing 100 jobs and adding up to 50 more.

And the DREAM Initiative, an economic development effort from the state to direct federal and state dollars to smaller communities is aiding in the effort to build up central Cape Girardeau, Mehner said.

The WIRED Initiative, a federal Department of Labor program, has provided $5 million for a 14-county region to work on economic transformation, a long-term effort.

One good place to measure pocketbook confidence is the grocery store. Dennis Marchi, general manager of the Schnucks Market in Cape Girardeau. Marchi said his sales spiked around Thanksgiving, an indicator that people stayed home rather than travel as gasoline prices reached $3 a gallon.

And the mix of items moving off the shelves is showing a stronger correlation to the items identified as sale items in advertisements, he said.

"People are paying attention more to our ads," he said. "The movement on our ad items is way up."

The costs of groceries is being pinched by those same higher fuel prices that kept many people home for Thanksgiving, Marchi said. Trucking companies are passing on a fuel surcharge and food processors are beginning to inch prices up as commodity prices paid to farmers escalate.

"The pie is only so big," Marchi said. "When a bigger portion is going to fuel costs, you have to cut back in other areas."

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