Economic Signals Flash Yellow: What Lies Ahead?

While the economy across Missouri has shown a few signs of improvement, growth may be starting to slow down again and even preparing to stop.

The overall economy improved moderately and continues to grow at a modest pace in the state, according to the latest summary of economic conditions by the Federal Reserve System.

The real estate market, along with retail and auto sales increased in the Federal Reserve Bank of St. Louis district, which includes the eastern portion of Missouri. Manufacturing and services sectors were mixed, however, according to the anecdotal information released on Wednesday.

Auto sales fell while manufacturing improved in the Federal Reserve Bank of Kansas City district, which includes the western portion of the state.

While not overly optimistic, the summary outlines some economic improvements in April and May.

In contrast, news on Tuesday revealed that Missouri was one of only seven states in the country last year without any economic growth. The state's economy flatlined compared to U.S. gross domestic product by state growth of 1.5 percent, according to data from the U.S. Bureau of Economic Analysis.

The state itself, meanwhile, is seeing growth in revenue collections. As Missouri Journal reported on Monday, even if collections slip this month, the state will likely hit the estimate for the entire fiscal year, which ends June 30. Collections increased 3.4 percent to $6.6 billion for the fiscal year-to-date.

A 3.4 percent increase in individual income tax collections may indicate more residents are back at work, while a 4.7 percent increase in sales and use taxes may mean consumers are more confident.

However, Missouri Budget Director Linda Luebbering said she feared the state may see a slowdown in collections this month due the turmoil underway in global markets and the European debt crisis. 

Analyzing where the economy may be headed in Missouri would not be complete without examining the labor market, and the state received yet another round of unwelcomed news Thursday morning.

Missouri reported the third largest increase in initial weekly unemployment insurance claims in the nation, increasing 1,898, according to data by the U.S. Department of Labor. Only Georgia and Tennessee had larger increases, while jobless claims fell by 12,000 to 377,000 across the country.

Last month, the state ranked third for fewer weekly jobless claims and also topped the nation in weekly unemployment insurance claims, highlighting how the reports often fluctuate week by week.

The unemployment rate inched lower to 7.3 percent in April, according to the latest jobs report from the state. Plus, for the first time this year, more people started jobs than left the labor force, which is significant because a person must be actively seeking employment to be considered unemployed.

While past economic performance is no indication of future results, the next state unemployment report may help to provide somewhat of a more readable road map of what's ahead for Missouri.

The labor market report for May is scheduled to be released next week on Tuesday.

By Brian R. Hook, brhook@missourijournal.com, (314) 482-7944

Hook is editor of Missouri Journal, which tracks the economy across the Show-Me State. 

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