Iowa’s economic picture improved slightly during July but the economy of the nine-state Midwestern region took a tumble, according to a Creighton University survey.
Creighton economist Ernie Goss says the state’s numbers were encouraging in the monthly survey of supply managers and business leaders, but the larger picture shows trouble brewing.
“The index, the leading economic indicator for the month of July was down again,” Goss says. “It’s the fourth decline we’ve recorded in the last five months. This recovery, and it has been a recovery, is now slowing and we’re moving into the area where I think the likelihood of a double-dip recession is rising.” He says higher energy prices combined with uncertainty over the U.S. debt situation during July were key factors that hurt business confidence.
“I don’t expect a double-dip recession but the likelihood of that is increasing each month, unless we get some changes,” Goss says. “What changes do we need? We need the housing market to get better. Housing is just pulling down growth, it’s depressing confidence. It’s a real negative in our economy.” The survey’s July business confidence index also fell, dipping to the lowest level since February of 2009.
“When we asked the supply managers to look out six months and tell us what they see, they see things not looking very good,” Goss says. “Of course, this is consistent with what we’re seeing from the national economy. The national economy is just not growing like most economists thought it would be growing at this point in time.”
Despite declines in the workforce over the past three months, employment growth in Iowa has pushed the unemployment rate down by 0.1%. Goss says the recent survey results point to improving job growth and a slight decline in the unemployment rate over the next three months.