Wichita’s economic recovery is slow, but there’s less uncertainty

01/28/2014 10:15 AM

08/05/2014 10:42 PM

Wichita’s economy is recovering at the speed of an ornate box turtle, the state reptile, and the pace isn’t expected to quicken much through 2013.

Next year, as every year, a host of question marks hang over the city and country that could either accelerate or halt the local recovery.

But there are fewer uncertainties than there were, said Jeremy Hill, director of the Center for Economic Development and Business Research at Wichita State University – and that counts as progress.

We know who the president will be. We know that federal health care laws and Dodd-Frank financial regulations are here to stay. We know that the eurozone probably won’t break up.

Hill said: “2013: It doesn’t matter if you like it, there is now less uncertainty. Businesses can adjust.”

The area’s strengths include a slowly improving employment picture after nearly three years of bumping along the bottom. There were about 288,500 people working in the Wichita metro area in November, according the Kansas Department of Labor, an increase of about 6,000 over the previous November.

The numbers jump around every month, but they show a consistent increase over 2011.

For next year, the Center for Economic Development and Business Research at Wichita State University is calling for an uptick with nearly 5,000 more jobs.

It’s not just employment. Wichitans experienced fewer home foreclosures and bankruptcies in 2012. That would generally improve as the economy improves.

And their houses are expected to appreciate in value. Local housing analyst Stan Longhofer is projecting that in 2013, home prices will rise 1.3 percent – the first time since 2010 – and home sales will rise 4.2 percent.

One of the leaders for employment growth could be Spirit AeroSystems, the city’s largest employer at more than 10,000 in Wichita, which continues to hire gradually as its customers raise production.

However, a shadow appeared over Spirit in November, when it reported a $211 million operating loss in the third quarter of 2012, even though revenue shot up 21 percent for the period.

Also powering the state’s economy in 2012 will be the continuing boom in both vertical and horizontal oil drilling, which is on track this year to produce more than 42 million barrels, the most oil in Kansas since the mid-1990s.

Other sectors are less promising.

The amount of local lending was flat in 2012, although there has been a slight easing in credit standards and improvement in loan quality, say bankers.

And, on the downside, most of the 1,800 jobs at Boeing will disappear in the next year as the company closes its Wichita plant.

And one forecast calls for the business jet deliveries to remain flat in 2013.

To be determined

Several big issues remain outstanding, beginning with the still unclear impact of the “fiscal cliff” on people’s paychecks and on government spending locally.

The state’s deep budget cuts, approved this year, aren’t supposed to force deep service and personnel cuts in 2013. But legislative researchers project a state budget shortfall of $328 million by July 2014. To fill that hole, Gov. Brownback may push to cancel the promised reduction in the sales tax from 6.3 percent to 5.7 percent.

The impact of changes to the area’s medical sector by the Affordable Care Act at the national level and KanCare, the Medicaid program that the state is moving to private administration, is still unclear. Several smaller hospitals blamed health care laws for layoffs this year.

Government action also plays a part in the question hanging over the state’s wind energy sector. There is speculation that Congress may renew some form of the tax credit that drove growth in the number of wind farms this year.

And for the state’s agriculture sector, the big question is the drought. If it starts raining again, expect a strong rural economy because of high prices for area crops and beef. If not, the whole state will feel the loss in income.

And what will the ultimate size and shape of Hawker Beechcraft be? The current plan for the company now in bankruptcy is to end jet production, which has been a huge money drain, and keep everything else, but questions remain over whether it might still be purchased and what the ultimate impact on the local economy will be.

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