Two financial experts warn the state’s economy has entered a "fog" and the recession will "last a while." Iowa State University economist David Swenson says Iowa’s economy didn’t soar as high as other states, so our drop won’t be as great, but Swenson isn’t projecting a quick economic comback here either.
"The economy is going down and I expect it to continue going down," Swenson says. "..The kinds of pressures that are pointing down are widepsread. It’s not just unemployment or employment, it’s what’s going on in particular industries as well."
David Underwood of Mason City is one of the members of a panel which estimates state tax revenues. "It appears that finally the recession has started to catch up with Iowa’s economy, so we’re starting to see the impact," Underwood says.
Some say unfounded pessimism among consumers is weighing the economy down, but Underwood says that’s not what’s driving the economy downward. "I don’t think very much of it is driven by the emotions," Underwood says. "It’s driven by reality."
Underwood says it’s too soon to say what official prediction he and the other two members of the panel which estimates state tax revenues will make in a few weeks. According to Underwood, some of the federal stimulus package may help stem the tide of unemployment. "Maybe our employment level isn’t going to drop as quickly as it could have," Underwood says. "And that’s what really drives (tax collections) in Iowa is the number of people working and the hours they’re working in Iowa."
Underwood’s not prepared to guess about what Iowa’s economy may look like in March when the Revenue Estimating Conference is scheduled to meet. "I’m not sure yet, because there still is a lot of fog out there," Underwood says.
According to Underwood, there are just too many unknowns. Few Iowans have filed their income taxes, so there’s no good indication there about what’s going on on that front, and Underwood says it’s hard to divine what’s happening in many businesses.
"Public companies quite often give quarterly forecasts as to what they think their company is doing and it was just kind of interesting that John Deere when they announced their earnings for the last year also announced they were suspending their quarterly forecast, just because of the uncertainty and they feel, I guess, their inability to even look a quarter ahead," Underwood says. "Every time I sit down with business people and I say, ‘OK, what do you feel about next month?’ they say, ‘I’m just worried about next week.’"
Underwood and Swenson are guests on this evening’s IPTV program, "Iowa Press," which airs at 7:30.