A Wichita State University researcher says he is ready to embrace an optimistic economic outlook for Kansas after years of preaching doom and gloom.
There is no guarantee of a forthcoming recession, said Jeremy Hill, director of the school's Center for Economic Development and Business Research, and the state economy won't necessarily mirror a national decline.
“There is concern increasing at the U.S. level about what’s going on about a next recession," Hill said Wednesday in a presentation to state lawmakers. "However, it is possible those concerns could be mitigated and we could grow a little bit longer than we have before. We could have a couple more years of growth, but watch those concerns. Those concerns could put us in a recession.”
He said he is optimistic about the Kansas economy in part because it has made lots of corrections in several markets in recent years. However, he said, trade polices could derail the progress.
The agriculture industry in Kansas has had a negative impact for the past two years and is expected to remain that way in 2019, Hill said. However, an aerospace industry that saw a slowdown in 2013 should continue to grow and be a boost for the overall economy.
After a decade of shifting from a high-skill to low-skill workforce, Hill said, there are signs of a reversal. Real wages have flatlined for a decade, but a tight labor market has given employees more leverage in seeking higher wages.
"Businesses have had all the power for a long time," Hill said, but now must compete for skilled workers.
Hill said too much emphasis is placed on the stock market and whether it is overdue for a correction. There is too much noise in the market, he said, to make it a reliable indicator of where the economy is heading. A bigger concern would be the housing market, which has shown signs of struggle.
Sen. Rob Olson, R-Olathe, said he was troubled that banks have stopped making loans because yields are so low. As a result, he said, lending on new housing has dropped off.
"I think we're going to have a reality check," Olson said.
Sen. Molly Baumgardner, R-Louisburg, asked Hill to review the effects of state economic incentives programs, including the use of sales tax revenue bonds to finance development projects.
Hill said the ability of an economic incentive package for a particular project would have a minuscule effect on an area's average wage.
“We’re giving a bulk of money for those projects and not really knowing — at least we’re not receiving from the Department of Commerce — the realizing of any type of significant growth as far as jobs,” Baumgardner said.