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A Booming Economy

January 17, 1996
By: Dana Coleman
State Capital Bureau

JEFFERSON CITY - A booming economy was the main theme of Gov. Mel Carnahan's State of the State address to a joint session of Missouri's legislature Wednesday.

It wasn't just political bragging in an election year. Economists and business experts say Missouri's economy really is booming.

"Everything they say is true," said Ed Robb, director of the Business and Public Administration Center at the University of Missouri-Columbia.

Diversity in private industry is one of the contributing factors to the success Carnahan praised, said Jo Frappier, President, Missouri Chamber of Commerce.

"The successes of the economy, the opportunities; they come from the private sector," he said. "Of course, some of the growth has been caused by inflation."

Agriculture, agriculture processing industries, manufacturing and construction have been increasing steadily in the past year, said Jim Gardner, a spokesperson for the Economic Development Department.

"These industries are all fairly stable, you're not going to see the big boom cycles, but you're not going to see the big bust cycles," he added.

Expansion in the manufacturing industry may be one of the reasons Missouri's unemployment rate is the lowest it has been in 20 years. Every 100 new manufacturing jobs bring 344 additional jobs, according to the U.S. Chamber of Commerce.

According to Carnahan, 15,700 new manufacturing jobs were created in Missouri between January 1993 and November 1995.

By updating manufacturing facilities, the surging auto industry has been pumping money into the economy, said Gardner. Spin-off companies, such as Tri-Com, a car seat manufacturer in Columbia, can also contribute to economic health.

In addition to low unemployment rates, performance of the construction industry is an indicator of economic prosperity.

"The construction industry in Missouri has been booming in the past couple of years. The industry has been adding a lot of infrastructure, but there is also a lot of commercial development," said Kevin Goddar, executive director of the Associated Builders and Contractors of Missouri and Kansas.

Employment in construction was up 9.8 percent during the second quarter of 1995. Also, building permits were up 30.1 percent during the same time period, Gardner said.

Weather plays a big factor in the construction industry, and heavy rains during the Spring had a damping effect on some Missouri contractors. However, despite backlog during the summer months, most companies were able to catch up.

Corn farmers were not so lucky. Most were not able to plant corn, which is often grown in the bottom lands, this year because of the early flooding, said David Emslie, a crops statistician with Missouri Agricultural Statistics.

"Production was down on everything this year, especially corn." Prices for cash crops are very high right now. In December, 1995, corn was #3.35 a bushel; in December, 1994 it was only $2.13. Soy beans sold for $6.80 in December 1995, but only $5.40 in December 1994.

The Gross State Product, sum of all the goods and services produced in the state's economy increased about 4.8 percent. It increased from $123 billion in 1994 to $129 billion, in 1995. "That's a healthy sustainable growth rate."

Professor Whitney Hicks at the University of Missouri-Columbia, said, "I think the data need to be examined critically. The data are frequently ambiguous. Since Kansas City and St. Louis are on state lines, it is often difficult to accurately collect data from those two cities.

"It runs in cycles. We've been on a high for quite a while. As long as we keep gaining in the national economies, we should be OK," Frappier said.