For the second year in a row, there's a lot to like in the forecast for Wichita's economy.
Jeremy Hill, director of Wichita State University's Center for Economic Development and Business Research, released his 2024 outlook Thursday.
He talked with Tom Shine and The Range about what's on the horizon, where the aviation industry is headed and what type of job market awaits college graduates.
And Hill said that after a string of pessimistic forecasts during the pandemic, he's glad to report good economic news again.
The interview was edited for length and clarity.
Jeremy Hill: "I went from people calling me the Duke of Doom and Gloom over the last decade. But the fundamentals weren't really great for our economy. Now, I'm being very optimistic.
So I've been remaining very bullish because … the firms are telling me they're going to hire … even if it slows down. They're that bullish when they do our surveys. And they have to compete on wages. So for me, this is good news for a lot of parts of our economy.
Tom Shine: Textron Aviation recently signed a long-term deal to sell 1,500 aircraft. Your report indicates that aerospace continues to head in a good direction.
Jeremy Hill: Absolutely. All the fundamentals for aerospace still look good. We have business jets, which is in our DNA. And that's what we had the big story for Textron. This is … that big reward from all this … latent demand over the last decade is now coming to flourish. However, we still have lots of demand for commercial, which they cannot keep up with and … military has continued to be much stronger than most people expected to be, continues to get lots more dollars.
So all the three drivers for aerospace have a very high upside to it.
Both Panasonic in the Kansas City area and Integra Technologies in the Wichita area have announced very large projects. Where are those workers going to come from?
So the difficulty right now is that we're at full employment or really near full employment. And so to get more people in, there's a lot more concessions that firms are going to have to do to get them. There are people still on the sidelines who want to work, but they need other arrangements to help them be engaged in the labor market.
And the biggest factor to the growth, and this is why I'm very optimistic, is because we have fundamental demand for industries. That means wages are going to come up, and we have to attract people in here.
Those people on the sidelines you're referencing. They're waiting for something. What are they waiting for?
So there are still people on the sidelines. And you see this from census data, whether they're health reasons or concerns about the economy, or just the market conditions are not right enough. So if you look at having to pay daycare versus what you might make on a … line at a manufacturing plant, weighing off those opportunities and saying, 'Hey, it's still worth for me staying on the sidelines, taking care of family.'
Everyone was waiting for a recession this year. And it hasn't happened yet. Is there still a threat of recession going into 2024?
For Kansas and for Wichita, they'll actually still remain at lower (risk), although we'll follow what happens in the national and global economy. I just think we're going to do better. The probability is probably closer to 30% … of a recession over the next 12 months. But I don't think we should be as worried here because we have fundamental drivers, new investments, that are going to really keep us growing a little bit better and faster than the broader economy.
For college students getting ready to enter the job market … what can they expect to find?
So, employers are hungry for talent, right? So, the opportunity is still great. And this is a great leverage for someone just graduating. They should be very picky. Because your first job is the trajectory for your next job. And so finding the one that's going to make investments in you, help you in your upward movement in your career is going to be super important.
So lots of opportunities for recent college graduates and high school graduates.
You talk about per capita income in the report, and it's risen over the last few years in Kansas. But so has inflation. How is that hurting our efforts to attract labor?
So this has been my ongoing story for several years. And the biggest issue is … the firms that say we are increasing wages, we're being more competitive. But when you really look at the numbers … we're not keeping up with not only the nation, or our counterparts. When I say counterparts, other industries like us … or our neighbors to the south and north and east and west.
And if when you look at the labor market today, people are highly mobile. So that is the biggest reason why the last several years we lost labor. Not that we didn't have jobs, it's just we weren't competitive.
In the report is a quote, "Wichita is well poised to navigate the challenges of the global economy and leverage its inherent strengths." What are our inherent strengths, economically?
If we look at economies that export, that are highly connected to the global economy, aerospace is on top of that. We have all these deep connections to the global economy … from banking, and finance and distribution and inputs. And even though the U.S. economy has all economists in the U.S. or outside the U.S. … expecting it to slow down, we're in segments because of manufacturing and aerospace to be highly poised to leverage the skills that are highly demanded on the global scene.
What haven't I asked you, or that's in the report, that people should really pay attention to?
There's a lot of things that I have concerns about that I … think that we should watch. … Each one of them have small marginal impacts on the economy. Now all of them together could put us in recession.
So think about students starting to pay back debt. I mean, all of a sudden, they don't consume. Think about our small businesses on Main Streets. They're going to lose that extra cash in their pocket.
We have strikes going on all across the U.S., and that power dynamic continues to build for workers wanting more. We got some of those issues still here, where workers aren't keeping up on that income. So that will slow our economy.
And … interest rates are really slowing down the housing market and is putting a lot of pressure on the commercial real estate market. So those are the ones that I have on the concern list. If they start adding up, they could put us in recession, but each of them only have a marginal impact on the overall economy here in Wichita.
