A new economic index produced by Emporia State University reveals Kansas’ growth in gross domestic product surpassed only Iowa among seven Midwest states during the year ending in November, a reflection of a slump in manufacturing exports.
Marc Fusaro, director of the Center for Business and Economic Development at ESU, said Kansas per-capita GDP expanded during five of 12 months in the one-year period. Annual growth in economic activity from November 2016 to November 2017 was 1.03 percent in Kansas, slightly better than the 0.9 percent expansion in Iowa.
Oklahoma, Arkansas, Missouri, Nebraska and Colorado had better one-year performances in terms of GDP, logging upgrades ranging from 1.19 percent in Nebraska to 12.2 percent in Oklahoma, he said.
Fusaro said Kansas’ 4 percent contraction in manufacturing exports during November tarnished the state’s one-year rating.
“That drop off in exports, that is what is causing our model to estimate a drop in gross domestic product for the month of November,” he said. “It’s somewhat significant.”
Fusaro said per-capita GDP in Kansas had been flat since 2014. That placed the state in the middle of seven states tracked in the Emporial State Economic Index, which relies upon 2009 economic performance levels as the benchmark. The monthly index fabricated at Emporia State bases GDP fluctuations on employment data, housing sales, oil prices, sales taxes, imports and exports, and a Philadelphia Federal Reserve assessment of economic activity.
“Some of the other states have continued to grow. We’ve leveled off a little bit more,” Fusaro told members of the House Taxation Committee.
The state’s GDP plateau began one year after Gov. Sam Brownback and Republican allies removed the state income tax on more than 300,000 business owners and reduced individual income tax rates. The Brownback administration promised profound job growth, but the steep tax cut led to a $700 million drop in annual revenue and fueled years of budget shortfalls. The gap between revenue and expenses prompted a 2015 increase in the state sales tax and the repeal in 2017 of Brownback’s supply-side tax program.
Rep. Steven Johnson, an Assaria Republican and chairman of the tax committee in the House, said tracking of GDP at Emporia State showed average workers in Colorado, Nebraska and Iowa produced more than peers in Kansas during the past four years. At the same time, the ESU index indicated workers in Arkansas, Oklahoma and Missouri were less productive than those in Kansas.
“It looks like Kansas is a little more stable,” Johnson said. “It looks like we had a little more positive activity early on and then a little flatter.”
Fusaro said Kansas hadn’t achieved the most robust GDP growth in the index, but remained ahead of rival Missouri.
“Kansas is mid-pack,” he said. “We do lead Missouri. That’s always nice to take note of. Those who you who live in the eastern end of the state can yell that from the roof tops.”
He said Oklahoma had experienced the most profound volatility in the index due to the state’s reliance on natural gas and oil commodities.
Fusaro said Emporia State’s monthly snapshot of GDP — released six weeks after the end of each month — was important because of the long lag in releasing quarterly reports on GDP by the U.S. Bureau of Economic Analysis. The Emporia State reports are not economic forecasts, he said, but could be viewed as a “now-cast.”
“I think this is a great project,” said Rep. Ken Rahjes, R-Agra.