Iowa’s economy is showing more signs of improvement but is still ailing, according to the latest report from Creighton University. For the 12th month in a row, the state’s leading economic indicator for May was in the red zone, but it shows significant recovery since hitting an all-time low in January.
Creighton economist Ernie Goss says the rebound is very slow in coming. "The numbers are pretty convincing that we are in a recession, even this part of the country is now in an economic recession," Goss says.
"The question becomes how long will this recession last and how severe will the recession be?" The survey polls supply managers and business leaders in Iowa and eight other Midwestern states. Goss says he expected to see more improvement for Iowa and for the region before now.
"Right now, we’re continuing to see firms in the region shedding jobs," Goss says. "We’re likely to see the unemployment rate increasing, in fact this Friday, I expect the national unemployment rate to go above nine-percent. We’re likely to record losses on the national level as much as 500,000 jobs, so that’s certainly not good on the employment front."
Despite the declines in employment, Goss says supply managers are very confident about the economy in the upcoming six to nine months. Low interest rates and the federal stimulus package have lifted the economic outlook for supply mangers in the nine-state region, but Goss says that recovery will come late in the year.
"Certainly the recovery in terms of overall output will likely come in the fourth quarter of this year," Goss says. "In terms of employment, we’re not likely to see any increase in hiring, at least any significant increase until the first or second quarter of 2010."
With the financial troubles hitting major American automakers, other companies with ties to the auto industry are feeling the effects, including the once-booming ethanol industry.
"The biofuels industry is not doing quite as well as it was earlier this year," Goss says. "We’re seeing a little drag from the biofuels industry and there have been some reported bankruptcies."
Iowa is the nation’s top ethanol producer. VeraSun Energy was among those ethanol makers that declared bankruptcy in recent months. Its plants in Fort Dodge, Charles City and Hartley were put under the umbrella of Valero Energy in April.