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Economy appears to be on verge of a slowdown
Sikeston Area Chamber of Commerce luncheon
SIKESTON -- Sikeston and Scott County had a good second quarter but should be ready for an economic slowdown in coming months along with the rest of the nation.
Bruce Domazlicky, director of the Center for Economic and Business Research at Southeast Missouri State University, discussed the national and local economies as the guest speaker for the Sikeston Area Chamber of Commerce noon luncheon Thursday.
"The economy is slowing down," Domazlicky said. He said experts expect the national economy slowdown to last six to nine months.
According to the Southeast Missouri Business Indicators, a quarterly report by the Center, second-quarter growth in Gross Domestic Product increased to 3.4 percent with increased governmental spending and business investment leading the way.
The report predicts, however, that economic growth during the second half of this year will slow down to about 2.5 percent due to slowed growth in consumer spending, a slower rise in corporate profits and a "credit crunch."
According to the report, the annual average rate of new home construction has fallen by a third to 1.4 million homes from about 2.1 million homes a little over a year ago.
"That's going to slow down the economy by at least a percentage point," Domazlicky said, adding this has an additional effect on consumer spending as "people not moving into new homes are not buying new furniture and appliances."
In examining new home construction data for Sikeston, "I looked at it five times and I couldn't believe the numbers," Domazlicky said.
Domazlicky said his data showed 40 new homes at an average price of $180,000 were built in 2005. In 2006, the number of new homes went up to 50 but the average price dropped to $70,000.
While 2007 data is not available to show if new home construction has slowed in Sikeston this year, "I suspect it probably has," Domazlicky said. "It seems this area will follow the national trend."
Even so, the report includes an encouraging statement: "It seems unlikely that the region will be affected as much by the housing slowdown as will other parts of the nation ... mainly because southeast Missouri has not experienced the overbuilding that has characterized some markets, which has led to major declines in new construction. Sometimes, slow, but steady growth has its advantages."
On the national level, "the labor market still seems to be doing fairly well," Domazlicky said, and the economic data shows "very encouraging employment data" for this area, as well. "Employment does seem to be growing in the region, in the county," he said.
Additionally, sales tax figures indicate there was an increase in retail spending here over the second quarter, although Domazlicky said he thinks that data may be skewed somewhat as it was recorded when the state received the tax receipts. Even so, the data indicates that "retail sales are growing," he said.
Domazlicky said he found it particularly interesting that Sikeston has 800 more people commuting here for work than it has people "out-commuting" to work other places such as Cape Girardeau or Noranda.
In response to an question about the education level of Sikeston's workforce, Domazlicky said the percentage of those with high school diplomas may be a little lower than the state average, but it isn't as bad as areas farther south in the Bootheel.
"We get a lot of good students from this area," he said.
Domazlicky also discussed a $85,000 grant received by the Center which is renewable for another two years.
"We're very excited about having it," he said, adding that he was surprised the Center was awarded the grant as there were 26 applications and only seven grants awarded.
Domazlicky said the Center intends to use the grant money to fund workshops, including geographical information system workshops in local communities, and for impact analyses.
In other business during the meeting, Missy Marshall, executive director for SACC, updated members on various local events.
"We have got a lot going on in the community," she said.
In addition to the annual Cotton Carnival taking place through Saturday, she noted among other events that the groundbreaking for the first Sikeston Habitat for Humanity home is set for 11:30 a.m. Saturday and a Life Chain event is slated to begin at 2 p.m. Oct. 7 at the Main and Malone intersection.
Marshall encouraged members to review SACC's calendar of events on its Web site before before scheduling an event to prevent conflicts.
"There is a lot going on the next couple of months," she said.