According to the Bureau of Economic Analysis, the U.S. economy grew by 5.7% in 2021 after contracting 3.7% the prior year. The first half of 2022 registered two consecutive quarters of negative real GDP growth, prompting some reporters to declare a recession. Those declarations, however, might be premature. It is important to note that the National Bureau of Economic Research is the official entity to call a recession, which is always retroactive and includes other variables beyond GDP. Currently, there are mixed signals about the broader economic conditions. Market volatility, inflation, the housing market, and negative consumer sentiment contributed to economic pessimism. Alternatively, gross domestic income, employment, and retail sales have remained robust and appear to be a proverbial firewall to a recession.
In 2021, Kansas' employment grew by 1.1%, adding over 14,700 jobs. In the Center's more optimistic outlook, employment growth is projected to add 10,107 new jobs at a gain of 0.7% in 2022. The slowing growth expectations are due to the tightened monetary policy and the labor market approaching full employment. Because of the potential market correction, the Center has a lower bound forecast for the state of 0.0% in 2023 and 0.9% in 2024.
The majority of expected growth for Kansas in 2023 is within the production sectors, increasing 1.4% and adding 3,316 jobs. The natural resources, mining, and construction sector is projected to have the second-highest growth in employment, expanding by 1.3%. The durables manufacturing industry is forecast to grow the fastest with 1.9%, which is driven by the aerospace industry and multiple plant locations and expansions. Non-durable manufacturing is expected to moderate in 2023 and 2024 after several years of robust growth.
Trade, transportation, and utility employment are forecast to expand 0.3%, increasing by 850 jobs. The slowing growth within this industry is driven primarily by the persistent inflation eroding household purchasing power and its effects on the retail subsector. The transportation, warehousing, and logistics portion of the industry had mixed market conditions. Within Kansas, the sub-sector expanded but had several setbacks to global supply chain issues.
The service sectors are projected to account for 55% of all job growth in Kansas in 2023, adding more than 5,600 jobs and increasing 0.9%. Within the services industry, professional and business services are expected to rise the most, with 1.5% in 2023 and 1.4% in 2024. On the other hand, financial activities are anticipated to decline by 2.7% in 2022 as the sector struggles to retain employees within the tight labor market.
The household labor market conditions remain robust as employers continue adding jobs throughout 2022. Labor demand is anticipated to expand by 0.6% in 2023 as firms continue to post more job openings. The growth will put further pressure on the market and will likely decrease unemployment over the next two years.
Due to unique market conditions increasing purchasing power in 2021, inflation-adjusted retail sales grew by 11.1%. However, in 2022, as the economy opened up after the global pandemic and consumption spending shifted from retail to service-related expenses like restaurants and entertainment. Furthermore, inflation eroded discretionary income, or after-tax pay, which slowed consumption for middle and lower-income households.
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