Springfield’s economic growth is better than state and national average but housing is potential stumbling block
SPRINGFIELD, Mo. (KY3) – Two economists from the St. Louis Federal Reserve Bank spoke to a crowd of about 360 on Wednesday about what’s happening in the financial world at a luncheon sponsored by the Springfield Area Chamber of Commerce.
And what they heard about the Ozarks was generally upbeat.
“The Springfield economy has shown a more stable growth than the rest of the country in part due to the mix of health and education being such a big part of the area’s workforce,” said Nathan Jefferson, a Research Economist with the St. Louis Federal Reserve Bank. “You do have a tight labor market and tight housing market, which can be a good problem to have because it’s driven by demand in both cases. But Springfield has a really low unemployment rate, so there’s a big competition for workers, and it’s hard for a lot of firms to find the workers they need.”
Springfield’s tight housing market has increased the cost of buying a home above the state and national average, and Jefferson pointed to the housing situation as a key to the area being able to maintain its growth.
“Springfield offers a lot of amenities and a low cost of living, which is a really good combination when it comes to what people are looking for,” he said. “But that influx of people has put a lot of pressure on the housing market and led to higher prices. So housing affordability is one of the main concerns. We’ve heard about supply chain issues and labor shortages, which are things that get in the way of building the housing that is needed. The real challenge is going to be keeping up with that demand.”
The Springfield area’s low cost of living is a well-known factor in more people moving here. But it’s also a double-edged sword in that wages are also, on the average lower than other parts of the country.
“Even though there’s a low cost of living here, I think there’s going to be a need for wages to increase moving forward,” Jefferson said. “So another major challenge for Springfield is gonna be finding a balance between being an economically-competitive region and meeting the needs of its workforce.”
“Wage growth and cost of living are always tied together in every community to a certain extent,” pointed out Springfield Area Chamber of Commerce President Matt Morrow. “But the real differentiator is communities that are skills-rich. So the opportunity we have as a community that has great educational and training resources is that we can invest in things that develop the skills for people so they can earn a great wage and earn it here.”
While the nation has avoided a major recession, the experts said that inflation is still higher than the Fed’s two-percent target and that housing sales have slowed down sharply, with mortgage rates doubling in the last year.
“Housing is an area where we’ve seen a real weakness over the last year-and-a-half,” said Kathleen Navin, a Senior Business Economist with the St. Louis Federal Reserve Bank, during her presentation at the Oasis Convention Center. “We’ve had substantial interest rate increases, and that’s driven up mortgage rates. As of last Thursday, the 30-year mortgage rate on a national average was about seven percent. And when we think about mortgage rates and house prices both being elevated, that translates to housing affordability being a pretty tough situation right now for potential homebuyers.”
Yet with all the challenges ahead, Morrow was encouraged.
“I’m most excited to be one of those communities and regions that’s growing,” he said. “When we’re growing, we’re able to do a lot of things well. Our problems get smaller, and our opportunities get bigger, so that’s a really good advantage that we really need to fully take advantage of. Over the years, we’ve seen the Springfield region tend to be pretty resilient. We tend to not go as deep into recession as the rest of the country and be a little quicker to come out of it. We’ve been more immune to some of the highs and lows. That’s a lot of what we heard today, but we also heard about some of the unique challenges for not only us but the country as a whole. We have shortages of supply and housing, and for a community like Springfield that’s growing faster than the national average, we really need to be looking at ways to provide the adequate housing supply for the growth that we all benefit from.”
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