by Norman Clifford, Institute for Public Policy and Business Research, University of Kansas
The national economy had another exceptional year in 1998, despite the fact that most observers had predicted that this
would be a year when the economy would cool off. However, the national economy is expected to slow somewhat in 1999,
although the forecast still projects output growth of 2.2 percent. This forecast depends upon real consumption expenditure
growth of 2.9 percent and small but positive real export growth of 1.0 percent which, though modest, is greater than the
rate of export growth that was experienced in 1998. Nevertheless, the nation is dependent upon the economies of our major
trading partners; therefore, there is a good deal of uncertainty surrounding the U.S. forecast for 1999.
The Kansas economy completed another strong year in 1998--in fact, is has had a very strong run during the last 5 years--
but it will probably slow down during 1999. However, relative to the longer-run performance of the economy, indicators
such as the unemployment rate and real personal income growth will still look better than average, and even job growth
will be only slightly below average. A large portion of Kansas exports go to the Far East, where there is still a great
deal of uncertainty about how the areas' economies will perform in the coming year; therefore, at this point 1999 appears
to be a year in which predictions could be revised significantly as events unfold.
Kansas Agricultural Outlook
by Allen M. Featherstone, James Mintert, and Terry L. Kastens, Department of Agricultural Economics, Kansas State University
Real net farm income during 1998 fell for the second straight year, driven by a sharp decline in crop prices and large
losses in both the cattle and hog sectors. Although yields and total crop production approached record levels, the
production increase was not sufficient to offset the price decline. During 1999 crop prices could improve modestly, but
production levels are forecast to return to long term trend levels. Combined with a sharp reduction in government
payments, the expected decline in crop production should lead to another significant decline in crop income.
Large total meat supplies led to large losses for both pork and cattle producers during 1998. Supplies of both commodities
are expected to be smaller in 1999, and prices higher, than in 1998, but the resultant improvement in livestock income
will not be enough to offset the expected decline in crop income. As a result, Kansas' real net farm income is expected to
fall in 1999 to a range of $200 to $400 million. The low crop income implies that Kansas land prices will be weak compared
to recent years.
The Northeast Kansas Outlook: Slower Growth
by Robert H. Glass, Institute for Public Policy and Business Research, University of Kansas
Employment in Northeast Kansas is expected to grow at a 2.3 percent rate in 1999, which is down from the 3.1 percent
growth rate in 1998. A comparison of the total non-farm wage and salary employment shows that of the six private sectors,
only two are expected to grow faster in Northeast Kansas than in the rest of Kansas: wholesale and retail trade, and
services. The fastest growing sectors in Northeast Kansas are expected to be services, wholesale and retail trade, and
mining and construction. The finance, insurance, and real estate sector will once again show a decrease in employment. An
examination of the four sections of the Northeast Kansas economy shows that in the Lawrence area, non-farm wage and salary
employment growth is projected to fall to 5.5 percent in 1999, down from 6.5 percent growth in 1998; in the Northern Tier
Area it is expected to fall to 1.6 percent growth from 1.8 percent the previous year. The Topeka area should see its total
employment growth decrease from 1.3 percent in 1998 to 0.7 percent in 1999, and the Kansas City, Kansas, area's total
employment will fall from 3.1 percent growth to 2.3 percent.
North Central Kansas: Some, but Slow Growth
by Arthur J. Janssen, School of Business, Emporia State University
With flat population growth from 1991-96, personal income growing at 1.9 percent, and employment growing at 1.6 percent,
the economy of North Central Kansas has been growing, although very slowly and lagging a bit behind the rest of the state.
The forecasts seem to indicate much of the same for the future--steady, but slow, growth. The region does not seem to grow
at the same rate as the state in times of prosperity, but it does not seem to go through any severe declines either: it
just continues to grow at a very slow rate. One major reason for the slow growth in recent years has been the reductions
at the military post. Like any area where the government sector plays such an important role, economic activity in the
region is largely dependent on Congress's attitude toward defense spending. Given the current political atmosphere, there
is no reason to believe that there will be any major changes soon, and these projections do not give one any cause to
believe things will be much different in the next few years.
Western Kansas: A Slowing Economy
by Thomas Johansen, Department of Economics/Finance, Fort Hays State University.
Agricultural conditions in both Northwest and Southwest Kansas have worsened since last year. Lower commodity prices
combined with near record yields have contributed to the problems. Lower cattle prices along with the grains have also
contributed to the weaker agricultural conditions. Opportunities to work in Western Kansas remain about the same as last
year. Many specialized businesses, in the most populated areas, are in need of labor but are unable to find the necessary
skills. Unfortunately wage rates have not increased enough to attract appropriately-skilled labor. Western Kansas has been
influenced greatly by the international recession. Government reforms passed recently can provide some short-term relief,
but until demand for agricultural products increases internationally, Western Kansas will likely lag behind the U.S.
economy for the next year, at least. Recovery of the economies in Asia, Russia, and Central and South America is critical
if demand for agricultural and energy products is to improve. Only then will the economy in Western Kansas resume its
South Central Kansas: Modest Growth
by Janet Nickel and Carlene Hill, Center for Economic Development and Business Research, Wichita State University
The South Central Kansas economy had a good year in 1998, but 1999 should be a year of modest growth for the region. The
outlook for manufacturing in the area is for a decline in employment of approximately 900 jobs, as aircraft orders
continue at a cautious pace due to global uncertainties. However, employment in the service sector is expected to increase
4 percent, or about 4,200 additional jobs. The majority of growth in service employment is likely to occur in business and
health care services. Historically, a slowdown in manufacturing employment eased labor shortages for service industries.
Personal income will continue to grow but at a slower pace, primarily due to the slowdown in manufacturing employment.
Overall, the region is projected to add 4,500 jobs in 1999, for a growth rate of 1 percent, compared to 1998's estimated
rate of 2.1 percent. Given the decline in manufacturing employment and the relatively higher pay in the sector, a slowdown
in the growth rate for total income is expected in 1999. The projected growth rate for the region in 1999 is 3 percent.
Retail sales should remain strong as South Central Kansas continues to enjoy new retail offerings and a wider market area.
Southeast Kansas: Continued Growth at a Slower Pace
by Robert Catlett, School of Business, Emporia State University
The momentum the region began to experience in 1994 is showing signs of weakening as slower growth appears to be the norm
in the near-term. The international financial crisis and the resulting decline in markets for exports from the region will
undoubtedly slow the growth of the region's manufacturing sector. The financial roots of the crisis may also affect the
region through changes in interest rates and other financial variables, as dividends and interest are unusually large in
this region as a source of income. Fortunately, while the financial crisis and less demand for exports are important, they
are not so pervasive as to cause a major downturn in Southeast Kansas. For example, transfer payments and health care
services are not likely to be slowed by international or even domestic recessions.
Labor shortages are likely to present the region with a greater challenge. Even if the unemployment rate inches lower,
there just are not enough workers to allow for a fast-paced expansion over an extended period of time. A migration of
workers to Southeast Kansas is not likely with the average earnings per job in the region well below the state or nation
as a whole.
The outlook for the region is for continued growth, albeit at a slower pace than a few years earlier and somewhat slower
than other analysts forecast for the state and nation as a whole. The outlook for the twenty-first century is another
story and the next few years may make a significant difference as the region adapts to change.