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As businesses and consumers look to move beyond the coronavirus pandemic and the economic impact left in its wake, 40-year high inflation, supply chain challenges and workforce hiring struggles all contributed to a muddled financial performance this year and continued uncertainty around a pending recession.
Attempting to tamp down inflation, which hit 9.1% year over year in June – its highest mark since November 1981, the Federal Reserve has raised interest rates seven times this year. The most recent hike on Dec. 14 boosted the Fed’s benchmark rate a half-point to a range of 4.25% to 4.5%, its highest level in 15 years. Fed officials signaled more hikes are to come in 2023.
The hike came a day after the consumer price index rose just 0.1% in November from the prior month and 7.1% from a year ago, according to the U.S. Labor Department. The year-over-year increase, while significantly above the Fed’s 2% target for inflation, equaled the lowest since November 2021.
Despite inflationary concerns, Federal Reserve Bank of St. Louis economists speaking at a Springfield Area Chamber of Commerce event in August projected a largely positive local landscape for economic growth. Nathan Jefferson, an associate economist with the St. Louis Fed, said Springfield’s annual gross domestic product growth will increase 1.7% in 2023, citing data from IHS Markit. That’s above the projections of 1.5% nationwide and 0.9% in Missouri.
Charles Gascon, a St. Louis Fed senior economist, said getting inflation back down to around 2% will be key to longer-term economic growth.
Jefferson said employment for the state is only expected to grow 0.5% in 2023 but the Springfield metropolitan statistical area should grow 2.3% – both less than the forecasted 3.8% national growth rate.
The tight labor market continues to challenge employers as the U.S. Bureau of Labor Statistics reported the number of job openings for October – the most recent data available – was 10.3 million, down from 10.7 million in September but equivalent to August. A record 11.5 million job openings in March indicated there were two positions for every jobseeker.
Jobs have been plentiful in Missouri, as nonfarm payroll employment was over 2.9 million in November, an increase of 8,200 jobs from October. Over the course of the past 12 months ending in November, there was an increase of 72,800 jobs in the state, according to the Missouri Economic Research and Information Center.
However, getting people to fill the positions has been a challenge, employers say. Missouri’s unemployment rate was 2.7% in November, while BLS data reported the Springfield MSA’s jobless rate was 2% in October, up from 1.6% a month prior.
Business leaders also reported rising expenditures continued to plague their companies this year. Nearly 90% of respondents in Springfield Business Journal’s 2022 Economic Growth Survey say the cost of doing business worsened over the last year. Only 3% responded that it had improved, while another 7% surveyed felt it stayed the same.
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