While some economists are looking very optimistically to 2012, a Creighton University survey of business leaders across the Midwestern region isn’t so rosy.
Creighton economist Ernie Goss says he’s not pessimistic about the new year, but he is trying to be realistic, based on the survey’s responses from respondents in Iowa and eight other states.
“The survey for the month of December was not that good,” Goss says. “It wasn’t bad. It’s still above growth-neutral, so what we’re looking at for the first half of 2012 is a slow-growing economy.” Both durable and non-durable goods manufacturers in Iowa reported strong business conditions for December in the survey.
Goss says manufacturers in Iowa had a very good 2011 as they added to their payrolls. He says big driver for the state’s economy revolved around food: processed, unprocessed and exported. The leading economic indicators were flat for December, Goss says, at the same time there were glowing reviews in the media about Black Friday and the following month of holiday sales.
“A lot of reports I’m seeing are getting way ahead of what’s actually going on,” Goss says. “I hear these really enthusiastic consumer responses and I think the numbers aren’t quite as strong, certainly our numbers. Of course, we’re surveying the midsection of the country that’s heavily dependent on agriculture but also international trade.”
Compared to last year, about 54% of the supply managers across the region said they expect sales growth for 2012, but Goss says that growth will be very gradual — along with the benefits. “We asked the supply managers about their expectations for payroll increases this year, about 1.6% on an annual basis,” Goss says.
“That’s just not good. Income continues to lag. There’s a limit, of course, to what you can spend if you don’t have income growth.” While strength in the U.S. dollar and a weaker global economy will be a challenge, Goss predicts Iowa’s economy will perform well for the first half of 2012.