August 20, 2014

Fed Reserve Bank finds caution among farmers over economics of 2015

A survey of Midwestern agricultural lenders conducted by the Federal Reserve Bank finds plenty of wary farmers across Iowa and the region. Nathan Kauffman, with the Omaha branch office of the Fed’s 7-state 10th District, says not too many farmers and livestock producers are worried about this year, but 2015 is another matter.

“Thinking about 2014, the crop insurance price for corn, for example, was set at $4.62 which is quite a bit higher than where cash prices are right now,” Kauffman says. “Going into early next year, February will be another important month, just thinking about what the crop insurance price might be set going into next year.”

Kauffman says most rural bankers reported solid credit conditions, but also say farmers are being very cautious about making equipment purchases or other capital outlays. “The important thing to note for now is that it looks like credit quality is still strong,” Kauffman says. “Repayment rates, though they’ve softened a bit, are still relatively strong, although that does present some concerns going forward.”

Analysts say this cautious approach by farmers will cause an economic ripple effect that will be felt by businesses throughout Iowa and across the region.


Medical school dean says there’s a need for more residencies

Medical schools in Iowa and across the country are accepting more applicants into their programs in order to meet the growing demand for doctors as a result of the Affordable Care Act. However, residency opportunities for doctors after they graduate medical school remain stagnant, according to Dr. J.D. Polk, Dean of Des Moines University’s Medical School.

“Although we’ve been increasing the number of medical students to try and meet the demands for the Affordable Care Act, the supply chain is coming through for medical students, but there are not an increase in residencies,” Dr. Polk says. “Right now, there’s roughly about 26,000 first-year residency slots and about 37,000 people applying for them. So, there’s really a mismatch.”

The number of residencies available for medical school graduates has been capped in Iowa since 1997. Polk attributes the lack of expansion to lack of funding. Most medical residency programs in Iowa are funded through Medicare dollars. “I think it really comes down to finances,” he says. “Without those Medicare dollars to help supplement and build a residency, it’s very hard for hospitals who have a slim margin to finance those on their own.”

Polk made his comments on Iowa Public Radio’s program “River to River.”


Forbes calls Des Moines best city for young professionals

Iowa’s largest city ranks at the very top of a new national survey.

Out of the 100 biggest metro areas, Forbes magazine lists Des Moines as the number-one city in America for young professionals.

Criteria include things like: median salary, unemployment, cost of living and percentage of population with a bachelors degree.

Iowa’s capitol city was also number-on the last time the survey was done in 2011.

This year, the number-two city behind Des Moines was again Raleigh, North Carolina, while Omaha-Council Bluffs moved up two positions to number-three.



Iowa native has homecoming with “Evita” performance

Christopher Johnstone

Christopher Johnstone

The nationally-touring Broadway production of “Evita” is making one stop in the state this week and an Iowa native is playing a key role.

Thirty-two-year-old Christopher Johnstone grew up in Cedar Rapids and now has homes in New York City and Los Angeles, although he doesn’t see either one very frequently as the show is constantly on the move.

“We’ve been on tour for over a year now so it’s almost every week,” Johnstone says. “We have Mondays off which is sometimes a travel day, so, it can be a long time of not seeing your actual home.”

Not that he’s complaining.

Johnstone says “Evita” is a “dream show” for him as he’s been a big fan since he was about 13. That’s when he first saw the 1996 film that starred Madonna in the title role.

“I remember listening to the soundtrack and thinking it was so cool, being able to listen to something I saw in the movie and famous actors and for some reason, I just really took to it,” Johnstone says. “I loved the story, loved the music and would just sing all the lyrics to every single song.”

Almost 20 years later, the production is hitting major cities across the U.S. and will only be in Iowa for three nights. It’s a brief but welcome homecoming for the actor and singer.

“We’ve been on tour for over a year and we didn’t hit Des Moines so I was like, c’mon, guys, see if you can book it, and thankfully they did,” Johnstone says. “There will be a lot of friends and family coming from Cedar Rapids and from around the state so that’ll be nice.”

The musical focuses on Eva Perón, who used her beauty and charisma to rise meteorically from the slums of Argentina to the presidential mansion as First Lady. Johnstone says it’s a thrill to be in the production.

“It’s something you’re proud to be a part of,” Johnstone says. “We’ve been hitting amazing cities, playing amazing theaters and the reception has been great. When you’re a part of something that’s so successful, it makes it enjoyable to go to work every day.”

The character he plays is named Magaldi and without giving away too much, he says, “It’s a lot of fun to be a bad guy.”

The Tony Award-winning musical makes its debut at the Des Moines Civic Center on Thursday and runs through Saturday. For details, visit:


Unemployment rate moves up in July

Iowa’s jobless rate saw a small uptick in the past month, according to Kerry Koonce at Iowa Workforce Development. The state’s seasonally adjusted unemployment rate rose from 4.4 percent in June to 4.5 percent in July. “We did have a slight increase in our unemployment rate for July over June by just a tenth of a percent,” Koonce says. “Although our civilian labor force grow, so did our number of unemployed individuals grew just slightly as well.”

The number of unemployed Iowans rose to almost 77,000 during July, up from about 74,000 during June. Overall, Koonce says, the total number of working Iowans fell to about 1,624,000 in July. “We really saw no change in the non-farm jobs,” Koonce says. “All of the gains that we had in the private sector were offset heavily by government areas and also in the leisure and hospitality areas. Some of the summer stuff starts to slow down.”

Education and health services added the most jobs during July, Koonce says, due to gains in both private education services and health care services. She says the state’s workforce is in better shape than it was a year ago. “July of this year, our non-farm numbers are significantly higher,” Koonce says. “We’re 16,500 jobs higher than we were at this time last year, so that’s very good. Plus, our unemployment rate this time last year was at 4.8% so we’ve lost 3/10th of a percent there as well. All in all, our numbers are looking very good compared to this time last year.”

Many seasonal jobs are vanishing as summer gives way to fall and back-to-school time, which may contribute to the jobless rate next month. “You’ll see a little bit of that, but you’ll also have teachers and colleges and universities and things like that going back as well so you’ll see an increase in the employment there,” Koonce says. “It usually tends to level out pretty good.” Iowa’s unemployment rate at 4.5 percent for July is well below the national jobless rate of 6.2 percent.


Iowa’s tornado tally is above the norm — and the season never really ends

Belmond Tornado, June 2013While Iowa is susceptible to tornadoes during any month of the year, the traditional tornado season is now over and the state came out with an above-average number of twisters this year, more than 50.

Meteorologist Rod Donavon, at the National Weather Service, says we may still see a tornado in the coming weeks and Iowans should never let down their guard for the risk.

“The season’s really never over and the official numbers can’t come out until December 31st, at the end of the year,” Donavon says. “We’re not expecting a lot of tornadoes after this but last year we did have that October event across northwest Iowa and back in 2005, we had a November event, so certainly it’s never over until it’s over.”

The recent drought years equated to very few tornadoes touching down in Iowa, but with the drought well behind us, tornado numbers picked right back up this year, especially during May and June.

“We are preliminarily up to 52 which is above average,” Donavon says. “A typical year, at least over the last 30-year average, has been around 45 or 46. We’re certainly up quite a bit over the last two years where we had 16 in 2012 and right around 20 last year.”

By contrast, a decade ago, Iowa set a tornado record in 2004 with 120 confirmed touch downs. Still, in recent years during the drought, Iowa went from May of 2012 to May of 2013 without a single tornado, four days short of a full calendar year.

“A lot of that had to do with the drier years,” Donavon says. “In 2012-2013, we just didn’t have the storms or the storm systems moving across the state and we were near record low numbers. We are much closer to average this year. We had a lot of what we’d consider weaker tornadoes, a lot of EF0s, EF1s, which fortunately didn’t hit much property or any neighborhoods.”

There were three tornadoes that registered as EF2s this year, but those were the strongest and none rated in the upper, more-destructive categories of EF3s, 4s and 5s. Two people were killed in tornadoes in Iowa this year. Both died in a twister that hit Keokuk County in April.

For an interactive map of all 52 Iowa tornadoes during 2014, visit:




Deere announces layoffs to adjust to product demand

After reporting a deep drop in quarterly earnings earlier this week, Deere and Company now plans to lay off more than 600 workers at four of its manufacturing facilities, including one in central Iowa and two in the Quad Cities.

Deere spokesman Ken Golden says the job cuts will be coming at the Des Moines Works in Ankeny, at the Harvester Works in East Moline, Illinois, the Seeding and Cylinder Works in Moline, Illinois, and at the plant in Coffeyville, Kansas. “The largest number on today’s announcement is from the John Deere Harvester Works in East Moline,” Golden says. “That’s about 425 employees at that location. Des Moines is going to have 110 employees on indefinite layoff.”

Deere is Iowa’s largest manufacturing employer and the company announced third quarter earnings on Wednesday of $850 million, down $150-million from a year ago. Ag equipment sales dropped 8-percent in the U.S. and Canada, 11-percent globally. “We are always going to align the size of our manufacturing workforce with the market demand for our products,” Golden says. “Our employees are aware of that and so there is going to be some flux in the size of the workforce.”

There are two ways the company makes adjustments, Golden says, like with extended shutdowns at each facility based on what’s being produced there. “For instance, in Des Moines, all of the employees will be on an extended shutdown through September 29th,” Golden says. “When we place someone on an indefinite layoff, as we have done today, we are not projecting a particular date that they will be called back. That’s the unfortunate thing.”

Deere is also implementing a seasonal shutdown affecting most of the manufacturing workforce at its Ottumwa Works. Production will be cut in the fourth quarter to meet market demand, which Golden says, is “not anything new for us.” Deere revised its full-year earnings projection to $3.1 billion, compared to its spring prediction of $3.3 billion.