Short Term Economic Prospects in Kansas

Philadelphia Fed coincident indices for Kansas have been revised downward, along with forecasts.


Figure 1: Log coincident index for Kansas, from February release (blue), March (red), April (green) and May (black), along with corresponding forecasts implied by leading indicators. All normalized to 2014M01=0. Source: Philadelphia Fed coincident, leading, and author’s calculations.

The forecast for May (corresponding to the black line) will be released on Friday. This will help us determine whether the slowdown is likely to continue.

12 thoughts on “Short Term Economic Prospects in Kansas

  1. c thomson

    Regardless of short-term fun about who runs the statehouse or whether the Confederate flag is on show, demographics really matter L-T. Kansas like WI and OH and CT and many other states is losing young people. See Bruce Hall’s chart.

    What the numbers don’t show is that the young leaving these dud states are the brighter and more energetic. The result is that local medical facilities remain full but the productive sectors decline. Barring spending cuts, taxes have to go up to compensate for this, accelerating the number who want to leave. This is already happening in CT.

    Of course, with or without tenure reform the faculty lounges will remain full so the process is of limited interest to the professoriat – until public sector finances well and truly implode. CT is approaching this. Yale is a great pond of tenure and research but unlike Stanford Yale doesn’t keep its young. Who wants to live in New Haven?

    Logically, one approach might be to make these states – many with bad weather and crummy logistics – more attractive economically. Get taxes down to the level of NC. Fiscally and ideologically this is tough. The Democrat establishment here in CT is dead set against this. Change? Who needs change?

    Over to you, Prof. Chinn.

    1. timm0

      CT, your excuse is, as is often the case with ideological rationalization rather than logic-based reasoning, contradictory. The Brownback economic policy for Kansas was created to attract businesses and people. If this has been unsuccessful due to ANY intervening response, such as flight of young people, then it helps prove (again), that supply-side, taxation-obsessing policies do not work as the Republicans believe. This has been demonstrated concretely, over and over, since the 1980s. The facts have never supported the propositions, except for an unusual spike for a few months here and there.

      Your position, which is at minimum sympathetic to Kansas and probably a true believer in the ‘cut taxes and then everything gets better’ voodoo, is that of a boxer with no arms. Just because you are personally obsessed with how much you pay in taxes (maybe you’re an exception, but I doubt it… I haven’t found any supply-siders who aren’t really just crazily compulsive about every penny that goes out in taxes) doesn’t mean everyone else – or even a majority of the public – rules their lives by every penny that goes to taxes. Get over it. Supply side economics is a total failure. It was proved a failure before Kansas – and its practice continues to provide nothing but additional data to discredit it.

      1. c thomson

        We have high taxes in CT AND no productive growth AND we lose the young and bright.

        Also crap roads and unpainted bridges.

        What’s your point, timmO? Taxes should be higher – then everything will come right?

        1. timm0

          CT – first, I appreciate your resounding confirmation of my suspicion that you’re tax-infatuated.

          People who aren’t totally and wholly obsessed with taxes tend to evaluate problems and consider solutions by examining causes, adjusting priorities, and weighing the options – then plan a path forward.

          People obsessed with taxes see a problem and scream, “Taxes are too high!”

          At no point do you ever actually get to solving a problem. In your head, the reason for every problem is high taxes.

          Where are the kids going? Why? What is at their destination that isn’t in CT? These are a few pertinent questions whose answers I doubt very much relate to tax rates.

          But that’s largely irrelevant. EVERY state has crumbling infrastructure. A massive percentage of your unpainted bridges and cracked highways were paid for by Federal dollars back in a time where the economy truly offered mobility, opportunity, and growth. There was minimal wage race-to-the-bottom battles with massively impoverished nations like today. Staggering sums of money, which now get funneled to the top .1% and then rot in casinos which do nothing to “lift all boats” – but used to make their way to the workforce, who circulated it in the economy. Maybe some of these things contribute to the problem?

          Or… maybe it’s just that the ding-dang libruls are taxin’ and spendin’!!!

        2. baffling

          “Also crap roads and unpainted bridges.”

          a large part of this problem exists because the gas taxes have held constant or dropped over time. these taxes funded the highway trust fund. you see exactly what will happen when you blindly follow the “cut taxes” ideology. you have a natural experiment staring you right in the face-can you even recognize it? same problem exists in all 50 states.


    Lower taxes to NC rates? And then “enjoy” the infrastructure, or lack thereof like NC? Not a good idea, trust me, I live in NC.

    1. c thomson

      Drove the length and breadth of NC recently – and my sister lives in Asheville – what is wrong with the infrastructure? Roads much better than in CT. Businesses move there. Population is growing strongly. What’s not to like?

      1. 2slugbaits

        Did you have a glass of that tasty Duke Energy water? And if you drove around the research triangle part of the state, then I don’t think you actually did much driving. Mostly waiting in a multi-lane parking lot. Sometimes I go to Cary, NC to the SAS headquarters (gorgeous campus by the way). A lot to like, but the traffic between Raleigh and Cary is enough to turn me off the area. In many ways it’s much worse than in the DC area or Chicago.

      2. baffling

        ct, roads are better because NC does not have to deal with freeze-thaw cycles and salt corrosion. people move there because of the weather-not the high paying jobs. climate is a benefit of NC, not policy.

  3. PeakTrader

    It takes many years to create and build a new industry to attract high-skilled workers.

    Private investment plants the seeds and profits are plowed-back to expand.

    Government can have a neutral, positive, or negative effect on a new industry.

    When there are more high-income workers, then there can be more government services.

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