Area experts predict healthy retail sales next year

Orders to U.S. factories posted solid increases in October and November while worker productivity jumped by the largest amount in two years, the government recently reported. It was the latest evidence the economy is rebounding from the Gulf Coast hurricanes and a spike in energy prices, leading area analysts to predict the economy will turn in a solid performance in 2006.

If factory orders are healthy, so is the retail sector.

"The overall prospects look good," said Ed Dust, director of the Sikeston Department of Economic Development. "I think that next year we'll see some improvement nationally, and for the local economy, we'll continue the steady growth we've had for several years now."

However, Dust does see a downside in the automotive sector. He said General Motors is closing plants in the United States and other countries, and Ford is rumored to be closing its plant in Hazelwood, Mo.

"The automotive situation will have an adverse effect on the overall economy, and there will be a slight downward trend due to loss of jobs," Dust said. "But we are a different animal than a lot of areas in Missouri. Our economy doesn't fluctuate up and down as fast as other areas do."

Dust said he studies the stock market every day because it is a good indicator of economic health -- local and national. He predicts the stock market will continue to climb and he thinks it will break the 11,000 mark by the end of the year.

"But energy prices are still high and that's a factor in the health of all businesses," he cautioned. "The prices have been on people's minds more than ever before. We never saw $3 a gallon gas until 2005."

Mitch Robinson, executive director of Cape Girardeau Area Magnet, a business recruitment group, said the cost of energy will be a major factor next year, but it won't drag down the economy.

"Based on our history around here, we've been able to develop new retail projects, and we're working on some right now," he said. "We'll see continued growth and the opening of new stores."

Robinson said the area has experienced above-average economic growth even during down times. This area is a hub of retail activity. He credits Southeast Missouri State University as a driving force in the area's economic viability.

"Having all the students here helps a lot. Those kids provide a labor force as well as being big consumers," he said.

At the Harrison College of Business at Southeast, economics professor Dr. Bruce Domazlicky is bullish on the economy.

"When you look at retail sales driven by income, the region's income growth will be 5 to 6 percent next year, and the retail increase will be about 4 percent over 2005. And it will be pretty close to that nationally as well," he said. "Incomes will rise and so will retail sales."

Domazlicky said energy prices are expected to fluctuate, but he doesn't think they will go much lower than they currently are.

The area's retail picture looks good to Cape Girardeau Chamber of Commerce president John Mehner. He thinks 2006 will be a good year.

"We'll have continued steady growth here," he said. "We are rather insulated from big economic highs and lows because of our business diversity. The wild card is energy prices. There are a lot of guesses out there."