Is Missouri's economy really getting better?

After Friday's surprising national jobs report, there are some clear signs the economy is improving nationally, and that perhaps the worst effects of the recession have passed. But on the whole, the average American still isn't sure what to think. A new survey from Rasmussen Reports shows just 27 percent of Americans think the economy is getting better.

But what does this mean Missourians?

Are we out of the woods yet? Perhaps. Several economic indicators are showing Missouri is faring better, even if the average person hasn't noticed.

Take for instance monthly changes in employment. In Nov. 2007, the month before the beginning of the recession, employment grew by 3,300 jobs in Missouri. At the peak of job losses nationally and in Missouri, Jan. 2009, total monthly losses in the state reached 13,400. And the most recent Missouri data, predicted for Oct. 2009, shows a net gain of 4,000 jobs.

With the exception of a few months, the trend exhibited in Missouri's nonfarm employment closely mirrors the national picture. One of those exceptions is Oct. 2009, when nationally the trend was still negative. The real test for the stability of the state's employment will come with the release of Nov. 2009 estimates. That official release is slated from the U.S. Dept. of Labor on Dec. 18th (but if the news is good expect Gov. Jay Nixon's office to release them a few days earlier).

Home construction declines also seem to be bottoming out in Missouri. According to Census Bureau data, year-over-year changes in new housing construction permits declined by just 128 in Oct. 2009, compared to the peak declines registered in Mar. 2009 of 1,156.

Before the economic recession began in Oct. 2007, Missouri logged 1,782 new constructions. Fast forward two years and new monthly home construction is just 40 percent of that level. This indicator is particularly important for two reasons.

First, in concert with the connection to the financial industry, the sector is partly to blame for the recession itself. Improvement in this segment of the economy signifies partial recovery of the root cause of current financial woes. It may be that we shouldn't expect new home construction to ever return to the inflated levels seen pre-recession, but at the very least minimization of declines is a positive sign.

Second, housing permits provide upstream data to indicate what will happen in construction employment in subsequent months. Since the declines are getting smaller, the impacts in construction employment, which typically takes a hit over the winter months, should also be minimized.

Another way to determine whether the housing sector is really recovering is to examine foreclosures. RealtyTrac reported foreclosure activity continued to slow through Oct. nationally. In Missouri, the slowing trend actually began in Nov. 2009 with only a few exceptions. In other words, fewer homeowners are losing their homes. In Oct. 2009, 3,218 homes were reported to be in foreclosure, compared to 3,585 in Oct. 2007. The improvement may not seem substantial, but it's enough to make a tangible difference in the housing market.

While none of these indicators present a definitive answer that the economy is improving, the trends are at least headed in the right direction. At this point, that's all we can hope for.

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