The monthly survey of purchasing managers in nine midwestern states turns up a dilemma this month. Creighton University economic professor Ernie Goss says an economic rebound continues, but confidence is down. He says the economy’s moving along, with new orders and employment looking good, but Goss says confidence has plummeted as managers don’t know what to make of the scandals reported at Enron, WorldCom, Xerox and other big players in the financial markets. Dr. Goss says their confidence is shaken by the scandals. The Federal Reserve hasn’t yet raised interest rates, but Goss says there could be a risk of inflation if they don’t.If businesses cut their buying and investing and consumers become pessimistic, we could head back into a “double-dip” recession, according to Goss, and if they don’t then the Fed will have to raise interest rates, which might not hurt. Right now, the economist says the dollar’s low on world markets.A major reason it’s down, he says, is foreign investors pulling their money out of Wall Street because of the recent accounting scandals. Goss says the dollar is lower on world markets, which makes our exports more appealing but will drive up interest rates within a few more months.He says it makes imported goods more expensive which will cause inflation down the road, pushing up prices of things and forcing the Fed to raise rates. Goss thinks by August the Federal Reserve will start moving the prime rate upwards once again.
