Missouri economy poor, but unemployment rate better than national average

Sunday, June 10, 2012 | 5:03 p.m. CDT

JEFFERSON CITY — Missouri's economic growth remained stagnant this past year, ranking near the bottom nationally and trailing every state in the Midwest, according to one of the most commonly accepted means of economic analysis.

Yet its unemployment rate remains better than the national average, recently ranking in the top 10 among states in terms of improvement.

Which of these facts matters more?

When it comes to elections, research shows voters pay more attention to the unemployment rate — even though it is a less meaningful figure. That explains why "jobs" will be one of the most commonly used words of the 2012 campaign.

"The thing that's easy for people to see — unemployment rates and, 'Do I have a job?' — that's the thing they tend to focus on," said David M. Mitchell, director of the Bureau of Economic Research at Missouri State University.

Yet there are better measurements of an economy. The "real gross domestic product" (GDP) is preferred by many economists. It's an inflation-adjusted measurement of the value of goods and services produced by a state or nation.

This past week, the federal Bureau of Economic Analysis released the estimated 2011 real GDP for states, and the news was not good for Missouri. The data show that Missouri's economy grew by less than 0.04 percent compared with the previous year. That ranked Missouri 43rd nationally— worse than any of its neighbors — and marked the third straight year that Missouri's economy trailed the national average.

Yet Gov. Jay Nixon continued to tout Missouri's economy as he spoke this past week at an energy summit in Kansas City. A few weeks ago, he cast a groundbreaking at a General Motors plant in Wentzville as "another example of Missouri's improving economy." And on the final day of Missouri's legislative session, Nixon recently declared that on a "major priority — jobs and economic growth — we continue to make real progress."

The Democratic governor's administration cites growth in Missouri's international exports along with two employment figures. It notes Missouri gained 35,500 jobs from December through April, more than any neighboring state. And Nixon's administration cites Missouri's 7.3 percent unemployment rate in April. That is the lowest mark in 40 months, notably lower than 8.1 percent national average.

"While we still have more work to do, these longer-term trends indicate that Missouri's economy is moving in the right direction," said John Fougere, a spokesman for Nixon's Department of Economic Development.

Nixon's Republican opponents also cite "long-term trends," while decrying Missouri's economy as weak.

The campaign manager for gubernatorial challenger Dave Spence contends any analysis should cover Nixon's full tenure as governor — not just the past few months. By that standard, Missouri lost 68,100 jobs — ranking 44th among states — from when Nixon took office in January 2009 through April, the latest month for which statistics are available.

"Our governor is playing games and trying to dress up bad news," Spence said. "Any way you slice it, we are falling behind."

Another Republican gubernatorial challenger, Bill Randles, said he also is "concerned about the manipulation of statistics" to make the economy sound good.

The reality is that the economy is neither booming nor tanking, said Murray Weidenbaum, an economics professor who is the namesake of the Weidenbaum Center on the Economy, Government, and Public Policy at Washington University in St. Louis.

"What's tricky is you can take either side and, by selecting your data, you can be quite accurate," Weidenbaum said.

Economists generally use the real GDP when gauging economic growth. Employment is merely one of many economic factors, and the unemployment rate can be an unreliable statistic because it can fall when people simply quit looking for a job and thus are excluded from the calculations.

Yet Mitchell's research found that voters pay close attention to the unemployment rate. His analysis of Georgia elections, which was published in 2006, found that an incumbent governor's probability of winning re-election increased between 9 percent and 45 percent when the local unemployment rate compared favorably to elsewhere. Other economic indicators such as per capita growth in personal income did not provide nearly that kind of boost.

"The state is in really bad shape economically, but the unemployment rate is lower than the national average," Mitchell said. "So people are going to look at this and they're going to say, 'Well, Governor Nixon is doing an OK job."

It probably won't be sufficient for Nixon's challengers to highlight Missouri's poor economic growth, he said. To win, they likely will have to focus on employment.

"It has to be a job-based tact in order for it to resonate with voters; otherwise, they're just not going to understand," Mitchell said.

David A. Lieb has covered state government and politics for The Associated Press since 1995. He can be reached on Twitter @DavidALieb.

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