According to Wichita State University’s Center for Economic Development and Business Research (CEDBR), the ripple effect of decreased demand along with public policies limiting activity will have a significantly negative impact on the state’s economy in just three months.

The CEDBR, part of WSU’s W. Frank Barton School of Business, developed a model to estimate the economic ripple effects on Kansas’ three metropolitan areas, along with the rest of the state.

The impact analysis included decreased demand, supply chain issues, decreased productivity and increased purchases in select sectors like grocery stores. The project also included the federal stimulus funding flowing into each region of the economy through households, governments and businesses. Because there is not a clear end date to the effects of the COVID-19, this analysis was limited to a three-month period.

Wichita and KC Will Have Greatest Negative Impact

The impact of the pandemic is expected to decrease both employment and output within the Kansas economy by 27% or 388,000 jobs, both full-time and part-time, within three months. The impact on labor income for three months is expected to be $4.8 billion.

The largest percentage decrease is expected to be in the Wichita metropolitan area, as the region had an already weak aerospace sector because of the 737 Max freeze and a higher concentration of vulnerable service sectors compared to the state.

The Kansas City, KS, metropolitan area is expected to have the second-largest decline in economic activity. Although the durable manufacturing sector is expected to be impacted by the supply chain disruptions, the area’s concentration in the vulnerable service sectors puts the region at a higher risk of losing these types of jobs.

The largest annualized decline in employment during the great recession was 4.6% in October 2009. When annualizing the impact of the coronavirus, the loss is expected to get to at least 12.1%, almost three times the previous employment loss.

Output measures all lost sales plus or minus inventory, whereas value added more closely aligns with gross state product. The multiplier for value added production lost due to the coronavirus is 1.9. That means for each dollar of lost economic activity, there is an additional 90 cents lost within the supply chain and other household consumption.

The rest of Kansas, which includes a number of micropolitan towns, is expected to lose over 103,000 jobs and about $1 billion in lost labor income over a three-month period.

Topeka is expected to have the smallest loss with only 21,000 jobs and $217 million in labor income. The higher concentration of government jobs both help insulate the economic impact.

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