Consumers key to stopping slump, economic officials say

AWAITING HOLIDAY SPENDING

"These statistics indicate that Missouri's economy was continuing to slow." -- Joe Driskill, director of the Department of Economic Development

By Jack Stapleton Jr. ~ Southeast Missourian

JEFFERSON CITY - Although several assistance programs are already in place, an official in the Department of Economic Development says the most important key to Missouri's prosperity is the Show-Me consumer. Director Joe Driskill predicts that the approaching holiday season, when consumers have traditionally increased their spending, will hopefully provide a stimulus to the state's economy, which even before Sept. 11 terror attacks was slowing down.

The Missouri businesses most sensitive to the terrorist attacks were airlines, travel-related industries including travel agencies, airport services and hotels, particularly those catering to air travelers. Some of these businesses have already begun to report increases, although not at the levels recorded in the past few years.

Even before the Sept. 11 attacks, however, the state's economic growth was slowing during the second quarter this year, according to figures compiled by the Economic Development's research section. For example, from April through June, there were 20 mass layoffs across the state, resulting in the loss of 4,318 jobs.

The persistent weakness of Missouri's manufacturing sector remained apparent as 60 percent of all layoffs occurred in this sector.

Following the index

Missouri's Purchasing Managers' Index increased slightly from 46.0 to 47.3 in August, although it remained below 50 for the sixth time in the first eight months of 2001. Economists consider the PMI a key economic indicator, as it measures such factors as new orders, production, supplier delivery times, backlogs, inventories, prices, employment, import orders and exports. Typically a score below 50 forecasts a sluggish economy for the next three to six months.

Added to these declines, the state's exports in the second quarter decreased nearly 4 percent from the previous year.

"These statistics indicate that Missouri's economy was continuing to slow," Driskill points out. "In fact, the state's and the nation's economies may have been teetering on the brink of a shallow recession even prior to the terrorist attacks," the Economic Development director said.

Progressive job losses

The department's Economic Research and Information Center has just completed a study of the current downturn in Missouri with an emphasis on Show-Me state employment patterns. Studying 20 years of job data in the state, center officials discovered that Missouri has progressively experienced a decrease of more than 20,000 non-farm jobs over the past several months.

Looking back over a 20-year period, similar decreases in non-farm employment were only experienced during general recession, such as in April through December 1982 and September through June 1991.

Currently these recession-like employment conditions have existed in Missouri since April 2001 and are expected to continue through the second quarter of 2002. Unlike the recessions in the '80s and '90s, when manufacturing experienced the greatest job losses totalling over 10,000, current job losses are being experienced equally by the state's service industries with more than 8,000 and manufacturing's 6,000 losses.

Slow retail sales

Although hard statistics aren't yet available, retail sales are slumping, according to the Missouri Retailers Association. General retail sales also declined similarly during the Persian Gulf War in the early '90s.

Another example of the impact of the current downturn, yet unrelated to the Sept. 11 events, is the recent announcement by Sprint Corp to lay off 6,000 employees. This will have a major impact on the Kansas City area economy as approximately 4,5000 of the affected workers will come from that region.

Taking note of these projections, Driskill said, "I have faith that the American consumer will prevail over this current economic setback. I hope that perhaps the one good thing that has resulted from this tragedy - a sharpened sense of American pride and brotherhood - will bring about a swift recovery of our people and our economy."