Mixed-signal recession puzzles economists

JEFFERSON CITY, Mo. -- State and federal economists are scratching their heads these days as they scramble to make sense of conflicting signals in Missouri's uncertain economy.

A study by the St. Louis Federal Reserve suggests that the national economic downturn will affect Missouri's best-educated workers, not those who historically have borne the brunt of hard-times: the less-educated, teen-agers and blacks.

The Fed's study, using the year 1994 as a reference point, notes that employment still remains high for the traditional victims of economic downturns, while for the most-educated group, those with college degrees, the jobless rate has reached its 1994 level -- and continues to climb. At least one reason cited by the bank's economists is the collapse of many of the so-called dot-com industries in both the St. Louis and Kansas City areas.

One explanation is that this downturn has simply occurred within those industries where the highly educated are more likely to work. So far, the downturn has affected the telecommunications, computer services and airline industries more than traditional blue-collar industries. However, bank economists warn job losses for the less-educated might be looming.

Weathering the storm

It is also possible, they point out, that the economic expansion of the 1990s has enabled more of the less-educated to weather the storm because the growth enabled them to gain the skills, experience and seniority to make it more likely for them to remain employed now than in years past.

Latest statistics provided by the Missouri Department of Economic Development show seasonally adjusted unemployment rates took only a small drop in December, falling only three-tenths of a point to 4.4 percent. One of the reasons given for this slight decline is that winter weather did not hamper many activities.

The state office noted that while there was a dip in payroll employment, manufacturing jobs increased in December for the second straight month.

Missouri's unemployment rate, now pegged at 4.4 percent, is well below the national average, which was 5.4 percent in December.

The greatest stabilizing force in Missouri's economy, all sources agree, is the state's predominant middle-class which includes 1,008,426 residents receiving Social Security, amounting to more than $9.1 billion a year.

Another population segment -- the least educated -- seems to be bearing an increasing burden from recent economic downturns, according to figures just released by the Missouri Association for Social Welfare, which is based in Jefferson City. According to this group, the number of homeless people in Missouri increased 42 percent between 1998 and Year 2000.