Kansas City economy bounces back

This impressive rate of recent job growth not only exceeded the region’s historical norms, it also boosted the region’s growth relative to the 11 metros we use to benchmark progress. The Kansas City area’s second-quarter job increase ranked second among these benchmark metros. The shift from job loss in the last six months of 2023 to job growth in the first six months of 2024 was sufficient to change the region’s ranking on annual growth from ninth at the end of 2023 to fourth today. Overall, the region added 17,700 jobs between June of 2023 and June of 2024 on a seasonally adjusted basis. Without seasonal adjustment, BLS estimates the region gained 22,700 jobs during this period.

The rapid increase in job growth also boosted average wages to $32.33 per hour, up $1.12 in the past year (3.4%). Wage gains in the second quarter of 2024 were more impressive, as a little more than half the annual increase (58 cents) occurred in this quarter alone.  If this rate of wage gains were to continue for a full year, it would represent a 7.5% increase in wages, which ranks fourth among the benchmark metros. Nonetheless, even with these wage gains, the region’s workforce remains among the lowest paid of the benchmark metros, ranking ninth in average wage.

Growth

• The broad industry of healthcare, social assistance and private education led the job gains over the past year, adding 10,000 jobs, reflecting the increasing demand generated by an aging population. (Note: Industry data isn’t seasonally adjusted, so it is not meaningful to examine industry changes on a quarterly basis.) 
• This was followed by 7,900 jobs being added over the past 12 months to the leisure and hospitality industry, which finally began to meaningfully move beyond its pre-pandemic job levels as people continued to increase their activities outside of the home.
• Retail continued its growth, adding 2,800 jobs, reflecting continued strong consumer spending. 
• While construction and manufacturing employment growth slowed from recent highs, they still each created around 1,000 jobs over the past year.

Decline

• At the other end of the spectrum, the professional, scientific and technical services industry lost 1,400 jobs, mostly the result of Oracle downsizing Cerner’s former operations.
• Administrative support also declined substantially by 1,900 jobs. Given that this category contains the temporary help industry and temporary jobs are the first to be cut when sales falter, this could be an early warning sign of an impending economic slowdown.

Perhaps the strongest sign of slower growth ahead is the unemployment rate creeping upward. At the end of the second quarter of 2024, Kansas City area workers experienced a seasonally adjusted unemployment rate of 3.4%.  While still low by historical standards, it represents a half percentage point increase over the 2.9% rate at the end of 2023. This increase in the unemployment rate mirrors that of the U.S. as a whole and has raised national concerns that the U.S. economy may be on the precipice of a recession.

If a national recession were to occur, it is likely to be mild. Because the Kansas City economy typically is more resilient during economic downturns than the nation, a mild national recession may only slow the region’s growth rather than stop it. This rosier scenario seems especially likely this time around, given the current acceleration of the region’s job growth is occurring despite any concurrent signs that a recession may be near.