The Wichita area economy will see little improvement, or even a slight decline, during the remainder of 2012, according to an index of leading economic indicators compiled by Wichita State University.
The index is intended to offer a sense of what’s in store for the local economy over the next three to six months.
Although the most recent index was for May, it is the continuation of a largely downward trend that began to be seen in early 2012.
“It’s not encouraging,” said Jeremy Hill, director of WSU’s Center for Economic Development and Business Research, which compiles the index.
Hill said he doesn’t expect much additional hiring in the area during the rest of the year.
The index is made up of Kansas initial unemployment claims, value of new residential and non-residential construction permits, average hours worked per week in manufacturing, value of new orders for aircraft and parts, aerospace stocks, wheat prices, the National Index of Consumer Confidence and the Conference Board’s Index of Leading Economic Indicators.
One of the biggest factors is falling consumer confidence, he said. People are anxious about the election, the prospect of federal tax increases and spending cuts starting Jan. 1, the debt crisis in Europe and the slowdown in emerging economies such as China and Brazil.
“It’s happened at the national level, and now consumers here are getting anxious, as well,” he said.
He sees a big turning point coming in November and December. The election will be over and Congress will work on the related tax and spending issues that make up what’s known in Washington as the “fiscal cliff.”
Hill said he’s been fooled before when he’s called for an improving economy. He said he’s still optimistic, but he is pushing the upswing into 2013. He thinks the U.S. economy has largely worked through its underlying problems and is just waiting for consumers and businesses to realize it.
“Remove all the political uncertainty and I am very optimistic,” he said. “ I think there is a lot of upside to the U.S. and local economy.”