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Short-term Trends
While gross domestic product growth for the Springfield MSA is expected to be slightly above the national trend for 2023, the MSA is projected to well outpace the state in GDP and employment growth.

Short-term Trends

While gross domestic product growth for the Springfield MSA is expected to be slightly above the national trend for 2023, the MSA is projected to well outpace the state in GDP and employment growth.

Local economy grows amid ‘muddled’ forecast, officials say

Economist notes conflicting financial data present ‘wait-and-see approach’

Posted online

Although a pair of state economists that spoke Aug. 24 at a Springfield Area Chamber of Commerce event didn’t quash uncertainty of a pending recession, they also painted a largely positive local landscape of continued economic growth.

Nathan Jefferson and Charles Gascon, both with the Federal Reserve Bank of St. Louis, spoke to an audience of roughly 425 at the chamber’s annual Economic Outlook, held at the Oasis Hotel & Convention Center.

Jefferson, an associate economist with the St. Louis Fed, said gross domestic product and employment in the Springfield metropolitan statistical area are both expected to outpace the state growth rate next year. GDP measures the monetary value of all goods and services. Citing data from IHS Markit, he said Springfield’s annual GDP growth will increase 1.7% in 2023. That’s above the projections of 1.5% nationwide and 0.9% in Missouri.

Employment for the state is only expected to grow 0.5% in 2023 but the Springfield MSA should grow 2.3%, Jefferson said. Both are projected to be less than the 3.8% national growth rate.

Jefferson noted Springfield has core industry sectors, such as health care and education, that are a community strength. Four of the area’s six largest employers – CoxHealth, Mercy Springfield Communities, Springfield Public Schools and Missouri State University – fall into those industries, according to Springfield Business Journal list research.

“These sectors are a lot more resilient and a lot less cyclical,” Jefferson said. “We’re not seeing the same kind of cycle of boom and bust as maybe economies that are built around tourism, for example.”

No immunity
Still, Jefferson said Springfield isn’t immune to the current economic challenges of weaker consumer spending and inflation.

“When we talk about education or talk about health care, these are areas that give it an advantage over other metros,” he said. “But it is still very much subject to recession risks and many negative effects of inflation.”

One national economic challenge Springfield has been unable to avoid is a tight labor market. Gascon, a St. Louis Fed senior economist, said amid the pandemic, the U.S. economy lost 22 million jobs – over 13 million more than what was shed during the Great Recession. However, job growth has swiftly increased over the past two-plus years.

“Now we’re back up to the employment level we were at prior to the pandemic,” Gascon said. “Right now, we have just shy of 11 million job openings, which is more than we have unemployed workers. There are two job openings for every employed worker in the country.”

The 1.9% unemployment rate in June 2022 for the Springfield MSA is a historically low rate, Jefferson said, citing data from the U.S. Bureau of Labor Statistics. The rate for July increased to 2.3% for the Springfield MSA, while it was 2.5% in Missouri and 3.5% nationally.

Shari Reaves, vice president of human resources at O’Reilly Automotive Inc. (Nasdaq: ORLY), said the tight labor market was the most relatable information she heard at the chamber event.

“It validated everything that we’re experiencing like all other companies in Springfield,” she said. “There are just so many employees that dropped out of the labor force and stopped working during COVID. Only a portion of them have come back.”

O’Reilly is engaging with local colleges and universities to recruit interns in the hopes that will translate to the students staying on board upon graduation. The company also is active on social media and job boards, Reaves said, declining to disclose job openings. O’Reilly employed over 82,700 employees companywide, including 2,340 locally in May 2022, according to SBJ list research. The local employee count is up from 2,253 in 2021.  

Recession rumination
The inflation rate stagnated in July but remained up 8.5% over the past year, according to the BLS. It was a shift from the increases experienced in June and May – 1.3% and 1%, respectively. The Fed’s target average of 2% will continue to be exceeded for some time, Gascon said.

“Getting inflation back down to around 2% and some stable prices is really key to longer-term economic growth,” he said.

Gascon said labor markets continue to improve and robust job growth exists, along with some modest increases in labor supply. But volatility in the economy has increased due to recession fears, global instability and uncertainty around Fed policy actions.

“Economic growth outlook is muddled by conflicting data. GDP has been weak, job numbers have been strong, incomes have been falling,” Gascon said. “It’s really kind of hard to make heads or tails of it. It’s going to be a wait-and-see approach in a lot of ways to know how that outlook is going to fall.”

Reeves said the chamber event didn’t sway her one way or another about the possibility of a recession, adding she remains uncertain.

“The point that I really took away from it is that there are so many variables, and everybody has varying opinions,” she said. “It’s just the uncertainty that everyone is concerned about.”

The Springfield Business Development Corp., the chamber’s economic development arm, organized the event. The chamber’s annual series concludes for the year Dec. 7 with the Manufacturing Outlook at White River Conference Center.

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