There’s run-away speculation about whether the U.S. economy is headed into a recession. Creighton University economist Ernie Goss says from all of the research he’s done, it looks like the course is nearly set.
"We are headed toward a recession, at least this point in time,"Goss says "there are lots of things that might avert that. There could be an interest rate cut by the Fed and also, of course, the Congress and the President are now evaluating a stimulus package. If that came in very quickly, I think we would avert a recession."
He says the probability, right now, is 50-50. Goss says conditions in the Midwest are much better than in other parts of the country. Goss says Creighton’s survey of rural bankers in ten Midwestern states will be released on Thursday. Goss says: "In this part of the country, one banker indicated to me in the survey that ‘We didn’t make the bad loans to begin with so we’re not going to see the real fallout here in this part of the country.’ In other words, the overly aggressive borrowing and the overly aggressive lending just didn’t really occur to any large degree here. Also, the upturn in housing prices that we saw in places like Las Vegas, Florida and California, we didn’t see here, so bursting the bubble, while we are seeing it here in this part of the country, nothing like what we’re seeing in places like Florida."
Goss says while the housing sector remains troubled, the next market that needs to be approached with caution is farmland values. Goss says: "While metropolitan land is declining in value for much of the nation, farmland prices running above 15%, 15 to 20% growth per year. Now, that’s the next bubble we are likely to see burst. I don’t expect it to burst anytime soon but there are some real issues related to farmland prices."
Goss says corn prices will continue to rise so this is a great time for Iowa farmers and farmers across the region. He says livestock producers will have a more difficult time.