1: Creighton University professor of economics Ernie Goss reports on the challenges associated with the production of Ethanol and the strain on the water supply.
2: Ingram’s Executive Editor and event moderator Jack Cashill enjoys a colleagial assembly with fellow professors and economists.
3: Jeff Pinkerton of MARC believes that the Kansas City area will soon enjoy the return of a robust economy.

The bankers that Ernie Goss has surveyed in the central Midwest expect the number one issue this year to be drought. “You’ve got a lot of water issues out there,” he noted. Ethanol production, which is revitalizing communities throughout the Midwest, is a heavy water user in terms of irrigation.

According to Goss, corn prices are going to be good for the year. Wheat prices will be good as well although probably not as strong as they have been. Soybeans will most likely be strong as well.

Chuck Krider wondered whether there was an overbuilding of Ethanol plants. “Is there some irrational exuberance?” joked Craig Hakkio.

Goss explained the economics of Ethanol which are now, at least, thoroughly clouded by subsidies. “Some smaller communities have placed their hopes in this,” said Krider, “and are likely to be disappointed particularly if the subsidies go away.”

“I think the demand for the product is there,” said Jim Moffett. “Unless oil goes down substantially or they take away the subsidies, you can build [plants] and they are going to run properly.”

The Kansas City Economy
“I think the local economy is fairly well balanced and is going to continue chugging along,” said Moffett. Bill Greiner described Kansas City as a “the Woody Hayes economy” after the legendary Ohio State coach, known for a strategy of “three yards and a cloud of dust.”

“I just feel a little excitement [in the Kansas City area],” said Ernie Goss, “and the purchasing managers that we survey are more optimistic about the future.”

Michael Stellern observed that the Federal Government is the largest employer in Kansas City, which has led to a good deal of construction and a strong economy. He also cited. Life Sciences as a growth area.

As Jeff Pinkerton observed, Kansas City has been a little bit below trend since 2001. “I think we’re about to turn the corner here,” he noted. “The excitement that you’re sensing, I think, is real.”

“I would say some of the medium-sized companies are doing pretty well, the Garmins, the Cerners,” said Anderson. “Kansas City is a great place to work, grow, and invest.”

“I would add that the downtown is doing better than it has in a long time,” commented Chuck Krider. Krider also cited the obvious progress in Wyandotte County and near the airport in Platte County. “I think it’s a good look for the economy,” he summarized.

Year End Headlines

Each year, we invite our guests to write a year-end headline, in this case to sum up the pivotal economic news of 2007. Forthwith are the entries, only slightly edited:

“Economy slows, markets do better.”

“Economy’s growth rate remains sluggish, dollar weakens.”

“US Economy weathers mid-cycle slowdown.”

“Trade restrictions and trade policy mistakes prove to be biggest economic issues for the US.”

“Sluggish economy finally improves.”

“Year of taking our medicine sets up for a healthier 2008.”

“Stock market dips late in the year because of delinquencies, defaults and foreclosures.”

“GDP grows 2.75 percent without inflation, markets prepare for rate cut.”

“Ten year treasury yields back above 5 percent.”

“Economic growth picks up without surge in inflation.”