The latest “Business Conditions Index” for Iowa and eight other states in the middle of the U.S. shows a slight decline from April to May. But Creighton University’s Ernie Goss — the economist who issues the monthly report — says the regional economy shows “growing strength.”
“Over all, the MidAmerica region is holding up much better than the national economy,” Goss says.
Goss predicts economic growth in the region for the next three months. For the first five months of the year, hiring accelerated in the nine states, including Iowa.
“Iowa’s holding up much better than the rest of the nation and if you look at the employment numbers from the government — the Bureau of Labor Statistic — those validate our numbers, showing that Iowa’s still adding jobs at a pretty good pace, better than the region,” Goss says, “and certainly better than the nation.”
That seems to run counter to today’s national report which indicated only 69,000 jobs were added to the U.S. economy in the past month.
“We’ve got the farm income and those industries that we survey that are connected to the farm sector still doing better even though agricultural commodity prices are down,” Goss says. “Again, overall, the MidAmerica region is holding up much better than the national economy.”
Interest rates haven’t been this low in decades, but there’s no real housing boom and the Creighton University survey found confidence in the economy “slumped” from April to May. Goss says uncertainty about the future is keeping consumers from buying big-ticket items and keeping businesses from making capital investments.
“For example, we’ve got health care reform. The outcome from that is uncertain. We’ve also got a record tax increase that’s slated to go into effect January 1 and then finally, of course we’ve got the turmoil going on in Europe and also the Asian growth is slowing,” Goss says. “For example, China’s growth projected for this year is about half what it was last year.”
Twenty-two percent of the managers Goss surveyed said their businesses will be negatively impacted by what’s going on in Greece, Spain and other European countries.
“The problems in Europe mean they’re going to be importing fewer products from the U.S. and, of course, those come from Iowa and the other MidAmerican states we survey, but secondly, because of the problems going on in Europe, this has had an impact on strengthening the dollar and lowering commodity prices,” Goss says. “…I expect those negative impacts to grow in the months ahead.”
Goss surveys business managers in Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota to calculate the Business Conditions Index for the region.