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Stan Ahlerich: Kansas is on right road to economic recovery

  • Published Friday, April 4, 2014, at 12 a.m.

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The Governor’s Council of Economic Advisors’ quarterly Indicators of the Kansas Economy report recently has been the subject of careless scrutiny. Some have taken the short-term numbers in this report out of context and misconstrued them, painting a picture of a lagging Kansas economy, when long-term trends reveal that our state’s economy is the healthiest it has been in the past decade.

The council looks at a vast array of information to assess the Kansas economy and its growth, from university research to the expert opinions of economists, among many other sources. As responsible and professional businessmen and women, the council members must look at a comprehensive set of information in order to truly understand the complex nature of the Kansas economy. Merely looking at a narrow, short-term set of facts, as was done recently, poorly serves the people of Kansas and our economy.

The Great Recession that struck the global economy was harsh, and led to dramatic actions at the national level. Kansas was not immune to the economic downturn.

From May 2008 to June 2010, Kansas lost 77,700 jobs. Since that low in 2010, however, Kansas has recovered 60,000 jobs. According to the Kansas Department of Labor, in the past three years Kansas has regained a higher percentage of jobs than any state in our region except one.

The economic trend lines during five- and 10-year periods are impressive and indicative of a state that is moving the right direction. Over these longer-term periods, Kansas’ trend lines for gross state product, personal income, private-sector employment and exporting follow regional and national trends closely, and often outperform them.

Short-term data should be viewed as a snapshot that should be analyzed in a broad context. A single year of data is based on a small sample size that does not always accurately reflect the underlying stability and health of the economy. Analyzing regional averages over short periods is particularly troublesome, because there are often outliers in the data that can significantly skew results in a small sample size.

Furthermore, the most recent data available in the quarterly IKE report often lags the current economic conditions because of the frequencies of data reporting. These data are useful when viewed in the context of longer-term trends, but cannot be taken as a stand-alone assessment from which to draw sweeping conclusions, as some have done recently. The tax reforms implemented by Gov. Sam Brownback were phased in starting in 2013. The current IKE data cannot reflect the full impact of those cuts. Tax returns are only now being filed for last year.

Short-term data can also obscure the fact that the Kansas economy is performing better than it has in years. Per capita income and gross state product dropped as the state lost jobs in 2009 and 2010. Kansas has not only recovered from those losses, but is well ahead of pre-recession highs. For the first time since fall 2008, the Kansas unemployment rate has been below 5 percent and ranks among the lowest in the nation. New business filings have increased for four consecutive years and reached record levels with 15,469 new business filings in 2013.

Kansas is on the right road. The data confirm we are enjoying the sustained, fundamentally sound economic growth that will ensure our state is a great place to live and work.

Stan Ahlerich is executive director of the Governor’s Council of Economic Advisors.

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