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By Gene Meyer | Kansas Reporter
Euro crisis will hit Kansas, researcher predicts.
FAIRWAY – Kansas’ already sluggish economy appears to be slowing even more, business executives report in a new economic survey.
World economic jitters – and particularly worry over the European debt crisis – hit export-heavy Kansas harder than most other states in the Midwest, said Ernie Goss, a Creighton University economist and head of the Creighton Economic Forecasting Group in Lincoln, Neb.
No other state in the nine Creighton researchers survey each month depends more heavily on exports than Kansas, Goss said.
Kansas makers of its best-known durable goods, aircraft parts and nondurable goods — such as food products — have been expanding their businesses to serve foreign markets.
World investors don’t want to buy euros while the European Union nations that use that currency figure out how to balance government spending with revenue. So the investors buy dollars, which drives up the overseas cost of everything made here.
“Europe’s economic problems are spilling over into the region, through weaker commodity prices,” Goss said. “Recent gains in the dollar have made U.S. goods less competitively priced abroad.”
The region to which he’s referring to are the nine states surveyed each month — Kansas, Arkansas, Iowa, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.
Creighton’s monthly Business Conditions Report, which Goss’ research group prepares, portrays snapshots of business executives’ sentiment on a 100-point scale. Scores thigher than 50 point to economic growth; lower scores point to economic contraction. Scores of 50 show a balance between the two.
Kansas’ latest reading, based on surveys of manufacturers’ purchasing managers across the state is a tepid 51.7, up from an even more anemic 50.7 in May. Individual scores for production, employment and unsold inventories, which are among the most important contributors to calculate the overall rating, ranged between 45 and 48.
“Trade weakness will show up in the Kansas economy in the second half of 2012, (and produce) weaker, but still positive growth,” Goss predicts.
Kansas’ exposure to foreign market risk is so large, “I’m surprised that rural Kansas is still doing as well as it is,” said Jeremy Hill, executive director of Wichita State University’s Center for Economic Development and Business Research.
Euro-crisis pressure on rural Kansas’ economy is real — “It’s dampening demand for everything,” Hill said. But rural Kansas employers are still hiring, at least for now, he said.
