After a couple of bad months, Iowa’s economic picture brightened slightly during February, according to a survey of business leaders and purchasing managers across Iowa and eight other Midwestern states. Ernie Goss is an economist at Creighton University, which does the monthly survey:
Goss says: "While the overall regional number was not good, the number for Iowa was much better with the index moving above growth neutral for February, although I’d have to say, this is after two straight months of below growth neutral readings." He says he’ll want to see a few more months of positive growth before he says Iowa has "turned the corner" economically, as at this stage, he’s not convinced. Goss says one thing that’s really dragging the economy down is the high price of energy.
With oil above $100 a barrel and with ag commodity prices very high, he says the inflationary pressures are cutting into companies’ growth and it’s cutting into funds that consumers have to spend, adding, "This is really slowing the regional economy down." There’s been much publicity about the economic stimulus package rebate checks that will be arriving in most Iowans’ mailboxes soon, but Goss doesn’t think they’ll have a significant impact on the economy. He says a larger impact could be made by the Federal Reserve Board, but even they won’t be able to do very much.
Goss says he expects the Fed to cut interest rates again when they meet on March 18th, but he adds, "Because of the excessive inflationary pressures, I’m afraid they’re not going to be able to put their foot on the gas. That means they’re not going to be able to cut interest rates by any more than a quarter percent." He suspects the Fed would like to cut rates much more deeply, but the inflationary pressures are just too much. Still, Goss says food exports will continue to be important to non-metropolitan areas of Iowa, with sales in 2008 of Iowa products to Canada and Mexico to exceed 4.5 billion dollars.