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KC Fed: Inflation cut incomes, unemployment below national average

© iStock - Khanchit Khirisutchalual
Joe Mueller

(The Center Square) – While unemployment remained low and below the national average, inflation cut into personal incomes in the Federal Reserve Bank of Kansas City's region.

The “10th District Economic Databook” stated the economy contracted slightly during the fourth quarter of 2022 in Colorado, Kansas, western Missouri, Nebraska, northern New Mexico, Oklahoma and Wyoming. The publication distributed Wednesday provides current economic information to help monitor trends and provide data to compare with previous information. The report also includes information on oil, gas and coal production.

Personal income increases were almost wiped out by inflation. Nominal personal incomes increased by 5.9 percent compared to last year. However, when adjusted for inflation, incomes increased only .3 percent.

Colorado had the highest percentage change in real personal income at 2.1 percent and a per capita personal income of $75,557. Kansas had the steepest decline in the region as personal incomes decreased 3.3 percent and its per capita income was $59,753.

The territory’s unemployment rate was 3.1 percent on Dec. 31, below the national rate of 3.5 percent. The region added 67,000 jobs during the quarter. Most of the job gains were in the manufacturing and leisure and hospitality sectors. The transportation and information sectors had slight declines in employment.

Home prices increased 10.9 percent in the third quarter of 2022 in the region compared to the same period in 2021. After an 18.6 percent year-to-year increase in the nation’s home prices measured in September 2021, home prices increased 12.4 percent in September 2022.

Wyoming had the highest increase in housing prices at 14.4 percent during the period, according to the Federal Housing Finance Agency purchase-only home price index. Missouri’s homes increased 12.3 percent, Kansas rose 12 percent and Colorado and Nebraska had 9.7 percent increases.

Housing permits declined 46.4 percent for single-family homes and 41 percent for multi-family homes in the region. Colorado had an 18.5 percent decrease in housing permits in September 2022 compared to the previous year. Colorado led the region with a 30 percent decrease in single-family permits compared to September 2022. Wyoming led the region with an increase of 18.56 percent in housing permits during the period.

An energy report from the bank reported activity slowed in the sector in late January. The price of West Texas Intermediate crude oil averaged $80.33 per barrel, down 8.6 percent compared to the previous quarter. The price of natural gas declined 39.8 percent for the week ending Jan. 27, according to the Henry Hub natural gas spot price report.

Approximately 28 percent of the nation’s active oil and gas drilling rigs are located in the 10th District, a 31 percent increase compared to last year. The nation’s 779 active rigs marked a 34.5 percent increase compared to last year.

Approximately 47 percent of the nation’s coal production took place in the 10th District, a 2.9 percent increase compared to November 2022. The nation’s coal production increased 1.1 percent compared to last November.