The monthly report that keeps tabs on the Midwestern economy finds all signs pointing to a weakening economy on all levels, in the state of Iowa, across the nine-state region and nationwide.
Creighton University economist Ernie Goss says across the board, inflation is rising, hiring is down, exports are down and imports are down. “It’s simply because our economy is weak,” Goss says. “It’s weak growth so we’re not purchasing as much. All in all, it was not a good report. It wasn’t a horrible report. We’ve seen a lot worse back in the bad old days of the recession. The U.S. economy, this regional economy is weakening.”
The Federal Reserve Board will meet in about two weeks and there’s much speculation the panel will raise interest rates. Goss says if that happens June 16th, it’ll be long overdue. “Inflationary pressures are moving up, up, up,” Goss says. “We’re still not into a danger zone but, it does push the fed to begin raising rates. I think they’re behind the curve. They should’ve been raising rates already but they haven’t.”
Iowa’s key economic indicator slipped during May but remains above what’s known as growth neutral, the line between a growing economy and one that’s in decline. The monthly Creighton survey goes out to business leaders and purchasing managers in Iowa and eight other states. It found the confidence level slipped a bit further for May but it remains in positive territory.
“I’m a little less confident right now,” Goss says. “I think growth is going to slow and it’s not going to match the fed’s goal and it’s not going to match the fed’s expectations.” Iowa’s durable goods manufacturers continue to experience pullbacks in economic activity, Goss says.
Producers in Iowa tied to agriculture, such as agricultural equipment manufacturers and metal producers, are reporting downturns in economic activity. On the other hand, he says, nondurable producers in the state report positive but weak growth for the month.