While the holiday buying season is in full swing, the latest survey of supply managers and business leaders in Iowa shows the state’s economy becoming very sluggish. Ernie Goss, an economist at Creighton University, says the November survey shows Iowa’s chief economic indicators were the most dismal since the recession of 2001.
"All in all, it was not a very good report with the economy slowing down significantly and with elevated inflationary pressures coming from higher energy prices," Goss says, "you put that together and the probability or the likelihood of recession, at least in my judgment, has risen significantly over the last couple of months."
Goss says Iowa’s numbers for November declined for the fourth straight month, despite the heavy turnout of shoppers across Iowa on Thanksgiving weekend. Goss says: "I think what we saw was a very aggressive retail sector doing a lot of discounting, doing a lot of promotion, doing a lot of advertising and that pushed the numbers higher. When it’s all said and done and when we look back on the holiday buying season in February, it’ll be not a good holiday buying season."
Goss expects growth during the season to be up only two-to-three-percent from last year. The U.S. Bureau of Labor Statistics is due to release its employment report on Friday. Goss says when the Federal Reserve Board meets next week, he expects the Fed to take quick action on interest rates in an effort to stop any further economic slide.
Goss says: "Given our numbers and the national numbers that we’re seeing, I expect a rate cut on December 11th and that certainly could help thwart any recession, but right now, I’m not nearly as optimistic as I was. In fact, I’m getting somewhat pessimistic about the economy." He says despite the growth in Iowa related to strong farm income, the growth in the state’s economy will slow in the months ahead with the jobless rate moving above four-percent in the first quarter of 2008.