Columbia Economy Signals Turnaround

The fall of 2009 might go down in local history as the end of Columbia’s economic fall.

The latest economic statistics show a rebound in Boone County’s housing market. The unemployment rate for the metropolitan area is back below 6 percent, the foreclosure rate is down and retail sales are higher than expected.

The number of people flying in and out of Columbia Regional Airport is the highest in nearly a decade, and the city’s primary employers — colleges, hospitals and property and casualty insurance companies — remain stable.

The most dramatic positive indicator is the housing market. The number of homes sold in November 2009 is slightly higher than in November 2006, a boom year, and the total value of the homes that sold is nearly as high as the same month three years ago. The number and value of building permits more than doubled in November compared with the same month a year ago. The housing market’s inventory level, or the absorption rate, is eight months, compared with nearly 16 months in November 2008.

In June and in July, retail sales tax revenue in the city was down more than 6 percent. But in August, retail sales tax revenue was higher than it was in August 2006. However, the September revenue was down again — nearly 5 percent compared with September 2008. It’s too early to know how local retailers will fare during the critical Christmas season. Collections during the holiday period will be recorded in February and March.

City officials expected they would have to take $1.7 million out of city reserves to balance the budget for the fiscal year that ended Sept. 30. Instead, the dip was about $200,000, in part because revenue was down 2.4 percent rather than the 3 percent that was estimated.

One area of concern is commercial development, which is still lagging as the graphic below illustrates.

Some business analysts are calling this an “L-shaped recession” because the economy has been flat since it hit the bottom of a downturn. If the local indicators continue their upward movement, Columbia’s recovery could take the shape of a “U.”