While December is usually one of the most robust buying months of the year, a survey of Iowa’s business leaders and supply managers shows economic activity actually sank last month. Creighton University economist Ernie Goss says Iowa ended 2009 much as it began the year, on a downswing. Goss says the state often takes its cues from the national economy.
“What we need to see out of Washington is more economic certainty, more clarity, in terms of health care reform, cap and trade, financial reform,” Goss says. “All that uncertainty is really putting businesses on the sideline, consumers as well. That’s not good because they’re not hiring or taking on new workers like we’d like to see.”
Goss predicts job growth will be a quarter of what’s needed to prop up the economy. Sales during the just-ended holiday shopping season were lackluster, Goss says.
“Of course, it’s been hampered by a heck of a lot of bad weather across the nation, particularly in the midsection,” Goss says. “Internet buying was up significantly but in-store buying was not good.” He anticipates holiday sales in 2009 will end up being down as much as one-percent from 2008.
As for the year ahead, Goss predicts Iowa will see growth, but it’ll be at a very slow pace as the state recovers from its worst economic drought since the Great Depression. “We’re looking at inflation ticking upward and that’s going to push interest rates higher so the individuals that are on the sidelines, thinking about buying a house, right now’s the time to buy,” Goss says.
While he expects Iowa to increase its overall number of jobs by two-tenths of a percentage point in the first half of 2010, Goss says manufacturing job growth will be nil. In the past decade, Goss says Iowa lost almost 45-thousand jobs, or 18% of its manufacturing employment. He says most losses were due to productivity growth of almost 50% over the decade.