A monthly survey of business owners and supply managers finds Iowa’s economy strengthening, but with signs the Midwestern economy may be starting to waver.
Creighton University economist Ernie Goss says it’s the 15th straight month Iowa’s seen its business conditions index climb into expansion territory. Goss says the region as a whole is seeing that number start to fall, slightly, though he remains optimistic.
“It is slipping and there are some troubling signs out there but when you look at it overall, this economy, this regional economy and the U.S. economy is expanding,” Goss says. “Some continue to talk about a double-dip recession. It’s just not there. We’re continuing, the expansion is still not as strong as we’d like to see.” The survey covers businesses in Iowa and eight other states across the Midwest.
This time, Goss says they were asked how the earthquake and tsunami that hit Japan last month is having an effect on their purchases and supplies. “About 16% expected to have significant or, in some cases, very significant impacts,” Goss says. “That’s stronger than what I expected. Sixteen percent? That’s one out of every six-plus firms and that’s too strong.”
Big automakers like G.M. and Ford are temporarily closing factories, Goss says, because of supply issues due to the situation in Japan — a situation that’s also having an impact on a wide array of businesses across Iowa and the Midwest. The overall index, or what Goss calls the business conditions index, is a mathematical average of factors, including: new orders, production or sales, employment, inventories and delivery lead time.
“Companies are doing real well right now and our surveys show that,” Goss says. “Profitability is going to be up for 2011, not significantly over 2010. 2010 was a very good year for company profits. We’re going to see 2011 is going to be good. We’re just not going to see the bump we saw in 2010 but it’s still going to be very good.”
According to Goss’ figures, Iowa lost nearly 60,000 jobs from the beginning of the recession in December 2007 until March of last year. In the past year, Iowa has recovered about 20% of those lost jobs. The Creighton surveys over the past several months indicate that by the end of the first quarter of 2012, Iowa’s employment rate will still be about 20,000 jobs below its pre-recession level.