The inaugural Economic Outlook Conference on Tuesday inundated the audience with economic facts, a few concerns and insight into three of Topeka’s top industries.
Economist Chris Kuehl is a forecaster and strategist for Armada Corporate Intelligence. He opened the conference by telling about 100 attendees that much is positive in the current economy, and then cautioned, “My favorite definition of an economist is someone who explains tomorrow why the predictions they made yesterday didn’t come true today.”
Still, data supports multiple positive aspects of the regional and national economy, said Kuehl, who highlighted a few Kansas stats, such as its status as the sixth largest export state in the country and that exports make up 15 to 16 percent of the state’s gross domestic product.
“Part of our success this year has been exports; they’re up, not really because of anything we’ve done,” he said, adding that factors affecting exports include an uptick in Europe’s economy, which is one of Kansas’ leading export destinations.
An economist for multiple manufacturers in his work, Kuehl educated the audience about the country’s manufacturing profile, which is more significant than most realize, he said.
“I spend most of my time dispelling the myth that we’re no longer a manufacturing country,” he said. “We are one of the leading manufacturing countries in the world. We don’t sell consumer goods; we don’t make consumer goods. We make expensive high-tech industrial machinery. The United States supplies 93 percent of all the railroad engines in the world.”
Along with Germany, the United States accounts for almost 70 percent of the value of global manufacturing, Kuehl said.
“We don’t make the stuff that goes in Wal-mart. We make the machines that make the stuff that goes in Wal-mart. That’s always kind of been our hallmark,” he said.
”The good news with both the PMI and the CMI is they’re hitting numbers we haven’t seen in seven or eight years,” he said. “The PMI is close to 60. It rarely gets that high. Anything over 50 is considered expansion, and you get into the 60s, that’s really expanded. The same thing’s happening with the CMI.”
The growth is pushing the economy into troubled waters in terms of finding qualified employees, Kuehl said, and his words were echoed by Tiffany Stovall, vice president of partnership operations at the Mid-America Manufacturing Technology Center.
She spoke on a panel with Janet Stanek, COO at Stormont Vail Health, and Kevin Hahn, chief scientific officer for Tri-Source Pharma Holdings.
The manufacturing industry is looking toward increased automation to make up for some of the workforce challenges, although those are difficult conversations to have because it’s tough to talk about replacing jobs with machines, Stovall said.
“When we talk about automation and smart manufacturing, we think that it will replace jobs, and in some case it does,” she said. “But it’s jobs that are going unfilled. We’re not necessarily taking jobs away; it’s about jobs that are sitting vacant. And further, what that also means is we need someones — lots of someones — to maintain that type of equipment.”
Stovall, along with the other two panel members, highlighted challenges for their professions, many involving uncertain regulatory environments or changing legislation.
For Hahn, working in the animal health/bioscience industry means a strong impact from what will happen with the farm bill, currently delayed.
Stovall said regulations change depending on the manufacturing industry, but she pointed to the Food Safety Modernization Act, which impacts the many Kansas manufacturers.
Healthcare, of course, is being challenged from multiple regulatory agencies, Stanek said.
“All we do is chase regulations in health care,” she said. “To narrow down probably the biggest thing we focus on right now as a community hospital is the constant change in the reimbursement system and the threat to how we get paid.”
Keynote speaker was Bill Northey, chief investment officer of U.S. Bank wealth management. He brought a global perspective to the outlook, noting that for the first time in over a decade all 46 economies tracked by the OECD, or the Organisation for Economic Co-operation and Development, are in an expansion mode on a year-over-year basis.
“If you think about that, across the globe, there is a synchronized global uptick in activity,” he said.
Still, Northey offered possible concerns, pointing to the fact that while there has been a long expansion in U.S. growth, it has been relatively shallow.
“We are four months away at present from having the second longest economic expansion in the modern era,” he said. “But notably, this has been a very low-magnitude recovery. It has been the slowest recovery that we have experienced since 1950. A part of that has been that we haven’t been able to break out of this 2 percent GDP malaise.”