New report shows Lawrence's economic growth is tops in Kansas and Missouri
I know when I’m on the treadmill it is sometimes hard for me to tell when I’ve caught my second wind. (Sometimes I have problems hearing the beeping of the defibrillator.) But there is a new set of numbers that is making it clearer that Lawrence’s economy is catching its second wind.
After years of being a laggard, Lawrence’s economy had the best growth rate of any metro area in Kansas or Missouri last year, according to a new government report.
The U.S. Bureau of Economic Analysis released its annual estimate of gross domestic product for each metro area in the country. GDP is just a fancy way of saying the government measures the total value of everything produced in a metro area. It generally is regarded as the best way of measuring the size of a community’s economy.
The report showed Lawrence still doesn’t have a very large economy compared to most metro areas, but it has been growing at an above average pace.
Lawrence's GDP grew by 2.4 percent compared to the average metro growth rate of 1.7 percent. The 2016 numbers were in addition to a strong showing in 2015. That year, Lawrence’s GDP grew by 3.6 percent compared to a metro average of 2.9 percent. That’s good news because the prior three years had been pretty lackluster. In 2014, Lawrence’s economy grew by 0.4 percent compared to a national average of 2.3 percent. In 2013, 0.5 percent for Lawrence compared to 1.5 percent for the national average. In 2012, Lawrence’s economy shrank by 2.6 percent compared to 2.2 percent growth for the average metro.
While Lawrence’s growth rate wasn’t near the tops for the country — Bend, Ore. and Lake Charles, La. both grew by 8.1 percent — it was tops for any metro area in Kansas or Missouri. Here’s a look, with the total size of the metro’s economy and its 2016 growth rate:
— Lawrence: $3.88 billion; up 2.4 percent
— Topeka: $9.145 billion, up 2.2 percent
— Jefferson City, Mo.: $6.55 billion, up 2.2 percent
— Columbia, Mo.: $7.8 billion, up 1.7 percent
— Springfield, Mo.: $16.31 billion, up 1.1 percent
— Kansas City: $114.37 billion, up 1.0 percent
— St. Louis: $140.71 billion, up 0.8 percent
— Manhattan: $3.11 billion, up 0.5 percent
— Joplin, Mo.: $6.46 billion, up 0.1 percent
— Cape Girardeau, Mo.: $3.68 billion, down 0.1 percent
— Wichita: $28.59 billion, down 1.4 percent
— St. Joseph, Mo.: $4.64 billion, down 1.6 percent
As far as what has caused Lawrence’s economy to grow at a good rate, 2015 and 2016 both were excellent years for new construction in Lawrence. The report shows the construction industry did add to Lawrence’s growth, but not as much as you may think. Of the 2.4 percent growth in the Lawrence economy, construction accounted for 0.18 percentage points. Higher up the list was durable goods manufacturing. That could be items like the garage doors made at the Amarr plant, for example. Durable goods added 0.39 percentage points. Non-durable goods, which could be the dog food made at the Big Heart plant, added 0.25 percentage points. The greeting cards made at Hallmark fit into one of those two categories, I believe, but I’m not sure whether a greeting card is durable or non-durable. (The ones that come from me mainly are just categorized as late and illegible.)
Education and health care added 0.32 percentage points. Professional and business services added 0.34 percentage points.
But the industry that added the most to the Lawrence economy in 2016 — by far — was the trade industry. It added 1.14 percentage points to Lawrence’s growth rate. In other words, almost half of all of Lawrence’s growth in 2016 was attributable to greater trade in the community. The category includes both retail and wholesale trade. The last couple of years have been good on that front, as the monthly sales tax reports out of City Hall have shown. Whether it be the addition of new retailers like Dick's Sporting Goods and Menards or whether it be new visitors to town via Rock Chalk Park or whether it be some factor we haven’t yet figured out, this report is another sign that something positive is happening in Lawrence’s retail sector. (By the way, all these numbers are adjusted for inflation, so it is not just that prices are going up.) Numbers like that one are probably a reason why there are a fair number of retailers interested in locating in Lawrence.
The other interesting part about this report is it serves as a reminder of just how small Lawrence really is. Lawrence sometimes believes the size of the world is somehow commensurate to the size of a basketball, which causes us to think we are a bit bigger than we are in actuality.
When you look at some of the numbers above, it reminds you that Lawrence’s economy is not very big by metro standards. Part of that is because Lawrence’s metro area is comprised of just one county, where other metros have multiple counties. But the reason our metro area is only one county is because that is about as far as Lawrence’s economic influence stretches.
There are several communities that stand out on that list. Joplin, Mo. has an economy that is almost 70 percent larger than Lawrence’s. Columbia, Mo. has an economy that is more than twice the size of Lawrence’s. I know what you are thinking, Columbia is much more isolated than Lawrence. It is true that isolation allows it to be more of a regional center than Lawrence. However, St. Joseph, which basically is in the shadow of Kansas City, has an economy that is about 20 percent larger than Lawrence’s.
Of course, Lawrence leaders may not want the town to be much bigger than it is today. I’ve long thought, though, that the GDP numbers give us a good way to make some comparisons, and perhaps, set some goals for what type and size of economy we would like to have.
In case you are interested, here are some numbers from some other communities in the region or other large university communities:
— Ames, Iowa: $4.35 billion, up 1.3 percent
— Bloomington, Ind.: $6.02 billion, up 2 percent
— Boulder, Colo.: $21.67 billion, up 1.6 percent
— Grand Junction, Colo.: $4.58 billion, down 3.5 percent
— Fort Collins, Colo.: $14.18 billion, up 3.8 percent
— Iowa City: $8.66 billion, up 0.7 percent
— Lubbock, Texas: $11.85 billion, 2.6 percent
— Morgantown, W. Va.: $6.69 billion, up 0.7 percent
— Provo, Utah: $20.49 billion, up 6.1 percent
— State College, Penn.: $7.9 billion, down 0.2 percent
— Waco, Texas: $10.58 billion, up 3.9 percent