Iowa’s economy weakened during the past month, according to a survey of the state’s business leaders and supply managers. Ernie Goss, an economist at Creighton University, says the monthly survey finds much of the nine-state Midwestern region in the same shape, beginning to founder.
“The leading economic indicator from our August survey, while it was up a bit, is still below growth neutral,” Goss says. “This is the first time that’s happened since the recession. All in all, it’s telling us that this regional economy is slowing down, and in fact, we’re probably going to be seeing slow-to-no-to-zero growth.” Goss says the economic slowdown is also pushing the regional employment index lower.
By year’s end, he says Iowa will likely still be down almost 32,000 jobs, or 2.1%, from pre-recession levels. Goss says inflation soared during August and it’s going to get worse.
“We asked the supply managers to look out six months and how much growth do you expect in prices — 2.8%, that’s up significantly — and multiply that by 2 to get 12 months and that’s 5.6% inflation,” Goss says. “That’s well above what we’ve been seeing.”
While the full impact of the drought has yet to weigh heavily on Iowa’s economy, Goss says he expects that to change in the months ahead. He says businesses linked to agriculture will likely experience a downturn in sales.
The report shows more than a quarter (26%) of business managers surveyed believe the drought contributed to increasing costs for their companies.