Missouri’s Recent Slow Growth Continues Trend

Recently released data on the output of goods and services showed that Missouri’s economy barely grew in 2015. While the U.S. economy expanded at a 2.4 percent rate last year, Missouri lagged behind, increasing at only a 1.3 percent rate.

The fact that Missouri’s economy is expanding at a much slower rate than the national economy is not new. To compare the pace of economic activity in Missouri and the United States over time, the chart above tracks the levels of output (real gross state and domestic product, respectively) over the past 20 years. So that the two series are comparable, each is indexed to its 1997 value.

The chart below shows that by 2015, output of the U.S. economy was about 50 percent higher than it was in 1997. In Missouri, however, output in 2015 was only about 20 percent higher. Not only did Missouri not expand as fast as the U.S. economy prior to the Great Recession of 2007–2009, but it also has not recovered nearly as much. Since 2010, the U.S. economy has grown by about 11 percent. Over this same period Missouri’s economy is just a little over three percent larger.

Missouri’s slow growth has many consequences, such as diminished opportunity for new jobs and a business environment that is not conducive to new start-up firms. The situation also has many causes, some of which stem from policy decisions, such as those related to taxes and education. The fact that Missouri is falling further behind should create some urgency in discovering causes and exploring some possible solutions.