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Greater Kansas City Chamber of Commerce 2017 ECONOMIC FORECAST Issued October 28, 2016 RISING PROSPERITY

The KC Chambers Economic Forecast Friday, October 28, 2016 Welcome Joe Reardon President and CEO, Greater Kansas City Chamber of Commerce Economic Update Frank Lenk Director of Research Services, MidA

CONTENTS Status of the U.S. Economy ......................................................... 4 Chart 1 U.S. NonFarm Payroll Employment Change, quarterly .4 Chart 2 U.S. GDP Percent Change, quarterly

Status of the U.S. Economy The recovery from the Great Recession continues and so far has lasted one year longer than the recovery following the 2001 recession and longer than the average U.S. expansi

If employment growth has been stronger than following the 2001 recession but output growth has been weaker, this necessarily implies that the rate of growth in labor productivity has declined postGrea

Chart 4 U.S. Unemployment Rates, quarterly Data are seasonally adjusted. Source BLS, retrieved from FRED, Federal Reserve Bank of St. Louis. The potential growth rate of the overall economy is basic

Chart 6 Despite relatively strong and consistent employment growth, the current third quarter 2016 employment to population ratio of 77.9 percent for this age group still remains 2.3 percentage points

Chart 7 The search for people with new skills is often signaled by advertising a job opening, and since February of 2015, such openings have generally exceeded hires. This indicates employers have bec

That real incomes have finally begun rising more generally is also seen in the recent release of the 2015 American Community Survey. Not only did real median household income jump by 5.3 percent natio

This low rate of inflation has allowed the Federal Open Market Committee FOMC of the Federal Reserve Board to keep its policy interest rate, the Federal Funds rate, extraordinarily low by historical s

Chart 11 U.S. Real GDP Projections, FOMC vs. RSQE, Fourthquarter to fourthquarter change Source Federal Reserve Board and University of Michigans Research Seminar on Quantitative Economics Overlaid

The FOMC projections also provide information concerning the anticipated future path of monetary policy. The socalled dot plot reproduced below Chart 12 captures individual participants projections. T

into the top 10 over time. Assessing whether the Kansas City area economy is growing tenthfastest or better along the key metrics then becomes a way of determining if the region is on track to achieve

KC Rising identified several key sectors of the regions economy important to the regions capacity to trade goods and services with the rest of the world, such as manufacturing, wholesale trade, inform

Chart 17 KC vs. U.S. Employment Growth Rates in Key Sectors, 20102015 Percent change from 1 year ago 4 3 2 1 0 1 2 3 4 5 10 8 6 4 2 0 2 4 6 Total Employment Percent change from 1 year ago Professi

Table 1 2014Q42015Q4 Job Growth Total Employment Professional, Scientific and Technical Services Health Care Manufacturing Finance and Insurance Construction Transportation Warehousing Wholesale Tra

In part because the Kansas City economy has been growing slightly faster than the U.S. economy in recent years, the regions unemployment rate is lower. Chart 18 In second quarter 2016, the official un

KC Economic Forecast The prior trend information along with the RSQE forecast was input into the REMI model in order to produce a forecast for how the regional economy will change between 2016 and 201

Sectors that serve the local population more than external markets tend to be more laborintensive industries, and several of these are expected to add a significant number of jobs. This includes retai

Greater Kansas City Chamber of Commerce 2017 ECONOMIC FORECAST SPONSORS AND INDUSTRY OUTLOOKS Issued October 28, 2016 20 The KC Chambers 2017 Economic Forecast

The KC Chambers 2017 Economic Forecast 21

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North American Outlook Election Uncertainty Clouds Outlook Sal Guatieri, Senior Economist, BMO Capital Markets With time running out on one of the most unusual elections in U.S. history, the race is

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US Economic and Business Environment By Clay Nickel Director of Investment Strategy, Arvest Wealth ManagementInvestment Management Group The U.S. Economy Plods Along The surefooted, slow moving econo

Carry On In last years KC Chamber Economic Forecast publication we closed with the following Think like a man of action, act like a man of thought. Henri Bergson. Economic data is best utilized to inf

Review ECONOMIC MARKET REVIEW 2016 has proven to be a decent year for markets despite all of the distractions. Of course, that could change in an instant, but in spite of so many headwinds, markets h

still below the Feds goal of 2.0, but now slowly gaining ground. Should overall economic growth remain modest, a sustained increase in inflation will create stress in markets and the economy. Jim Hunt

32 The KC Chambers 2017 Economic Forecast

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United States Economic Forecast Pundits and analysts overuse the word uncertainty when discussing the economy, especially during election seasons. Indeed, youve likely read a lot about how uncertainty 36 The KC Chambers 2017 Economic Forecast

By Tim Laughlin Director, Investment Management, First National Bank Subdued Economic Outlook Continues From an economic perspective, 2016 is looking similar to many of the previous years. After a

Industry Update and Outlook Wealth Management Industry By William B. Greiner, CFA Chief Investment Strategist, Mariner The Current Industry Landscape The wealth management business has been expanding,

The tax man cometh. Tax rates are uncontrollable, but an investors exposure to those tax rates can be controlled in most cases. Upwards of 40 percent of an investors total return can vanish due to le

Construction Industry Outlook By Pat McCown, CEO, and Nancy Whitworth, VP, Human Resources Construction Growth is Positive, Although Not Spectacular Overall The overall construction outlook for the K

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By Nick Binetti, 2016 KC SmartPort Summer Intern 2017 Transportation Outlook Shipping is vital to the everyday life of the average consumer and in the ever changing world of commerce. As technology

percent and 4.3 percent, respectively. While the national unemployment rate dropped, it has not been as a result of job creation which has been disappointing in 2016. Many people dropped out of the la