Despite risks, Fed economists predict Springfield’s economic outlook is ‘a really positive picture’
More than 400 local business leaders packed into a Springfield hotel this week to hear economists from the Federal Reserve Bank of St. Louis — one of 12 offshoots of the U.S. central bank. They shared an update on the Springfield regional economy and what could come next.
Southwest Missouri continues to experience historically tight labor and housing markets. That means there are more jobs than workers to fill them, and more would-be homebuyers than houses for sale.
Before his speech, Fed economist Nathan Jefferson told KSMU the local jobs market is still getting over its pandemic hangover, even though businesses are back to being really busy.
Jefferson said, “So what that means is that we saw maybe a lot of people leave the workforce due to the pandemic and some of them aren’t quite returning, but we’ve seen business activity pick back up again, so there a lot of employers looking for workers and the workers might not be there right now.”
Those tight labor and housing markets are putting pressure on prices to go up, Jefferson told the crowd. But he said metro Springfield relies on some key strengths:
- Big Springfield industries like education and healthcare help stabilize growth, protecting the metro from boom-and-bust business cycles
- Population growth in Springfield and nearby areas is increasing faster than in Missouri overall
Jefferson added, “The longer-term trend that we’re seeing from the numbers we have access to still paint a really positive picture, especially in comparison to the state in general. Obviously, it’s been a standout metro in terms of growth over the past decade from 2010 to 2020.”
Risks of recession?
Growth is expected to slow over the rest of this year, Jefferson said, but Springfield will likely grow faster than Missouri’s state average. Meanwhile, metro Springfield still faces the same risks as everywhere else in the country: inflation, potential weaker spending on goods and services, and possible recession.
Another Fed economist, Charles Gascon, confirmed there’s a chance the U.S. could face an economic slowdown sometime in the next year or so. Depending on the forecaster, he said it could be somewhere between a 2-percent chance — and a 50-percent chance.
But Gascon underscored the importance of strong demographic growth in the Highway 65 corridor for the area’s long-term future.
Gascon said, “In the U.S. economy now we’re seeing demographics come into play with an aging population and that’s ultimately just leading to slower longer-term growth, so that presents challenges for the state and the region as a whole. But Springfield, as you said, down into Branson and northwestern Arkansas has been able to attract younger people and grow their population and as a result grow the economy.”