Report: Kansas economy growing far slower than US economy

? The Kansas economy has been growing far slower than the rest of the nation, and a report released Thursday forecasts sluggish growth in the state next year as well.

Wichita State University’s Center for Economic Development and Business Research noted in its annual employment forecast that the nation’s gross domestic product expanded with 3.9 percent growth in the second quarter of this year after growing 0.6 percent in the first quarter. Employment was up by 2.1 percent nationally in the past 12 months, while Kansas employment grew by just 0.9 percent. Employment in the Wichita area grew by 1 percent.

The report predicts Kansas employment next year will grow 1.4 percent, which would mean 19,958 new jobs in Kansas.

“I don’t think we are optimistic really at all,” the center’s director, Jeremy Hill, said. “I think we are pretty pessimistic about the state’s economy.”

Hill said the forecast of nearly 20,000 added jobs in Kansas next year is not really a big number and that 1.4 percent growth is not strong.

The figures in the center’s report come from a national survey of employers, and the numbers are then estimated down to the state and local level by industry. Hill acknowledged the process has a lot of errors; in the last couple of years, the center’s forecasts have overestimated job growth. The figures are revised in February when the reports of actual number of employees working at the surveyed firms are compiled.

But Hill says the early forecast based on the survey shows general trends in the state and local economies across industries. The U.S. economy is expected to grow around 2 percent next year.

“The general tone we are seeing is we are growing, but we are growing a whole lot slower than that of the nation,” Hill said.

Hill attributed that in part to the factors that drive the Kansas economy. Agriculture is a major one. Farm income is “not looking that great” with crop prices down and the cost of inputs such as fertilizer still high. Weak exports are hurting prices. The economy in China is slowing, and that is expected to impact Kansas because 10 percent of all Kansas exports going outside the United States go to China, he noted. The top exports to China coming from Kansas are grains and processed food.

While the oil and gas industry in Kansas doesn’t account for a lot of direct oil jobs, the industry can really impact the state negatively on the income side, he noted.

“Manufacturing continues to look really weak across the entire state,” he said.

Also dragging down the state’s economy is that real wages adjusted for inflation have not gone up since 2008, except for higher technical skilled workers that comprise about 20 percent of the workforce. That means about 80 percent of workers had no real increase in wages since 2008, after adjusting for inflation, Hill said. That hurts the retail industry and its workers, he said, and foretells more problems for a state budget heavily dependent on sales taxes.