Recessions brought on by credit crises are the worst kind, the kind that cause depressions. The kind that dry up credit and close banks. The kind that cause businesses to fail. And the kind that ratchet up unemployment.
Wichita has felt and continues to feel the pain of a global credit crisis that began in 2007. Our general aviation manufacturing has its challenges as a result of a collapse of capital spending on business aircraft. The trickle-down effect to the many suppliers doesn’t make the news as often, but it is just as impactful on the economy.
The service sector suffers, because incomes have declined due to job losses, and spending by those who do have jobs has contracted. Home sales and values are depressed because of a contraction of credit and a surplus of houses.
The bad news is that this type of recession tends to suppress economic activity for an extended period of time, perhaps another three to four years.
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However, the good news for Wichita and Kansas is encouraging.
Our state and local unemployment rates are well below the national average. We did not participate in the excesses in housing that other parts of the country did, so we don’t have huge surpluses of repossessed homes to move before new home demand can resurface. Credit requirements for new home buyers are easing, and loan approvals are moving faster.
Corporations are flush with cash, making the purchase of business jets more viable.
Agricultural products are in demand globally, helping regional farm incomes as well as agricultural product manufacturing. Kansas’ energy business is accelerating with oil and gas well fracturing and with wind.
Our banks are in good financial health and interest rates are low.
It may seem like it is taking too much time to return to business as usual, but the direction is positive, and the opportunities will be greater rather than lesser.