Ernie Goss
Some analysts say spiraling gasoline prices are causing significant instability in stock markets, agricultural commodities markets and elsewhere.
In a survey of bank CEOs in Iowa and nine other Midwestern states, Creighton University economist Ernie Goss says pessimism is contagious.
“With grain prices down, with beef prices down, pork prices down, it’s spilling over into the broader economy,” Goss says. “Agricultural equipment sales are down to a record low level. We’ve got farmland prices continuing to decline.”
While Iowa is the nation’s top ethanol producer, falling prices for grain and fuel are impacting the entire region’s ethanol industry. About one-fifth of the bank CEOs surveyed reported ethanol plants in their area had reduced production.
“It’s not good out there,” Goss says. “With the global economic slowdown, our trading partners are buying less and less of our agricultural products.” The rollercoaster stock market leaves traders with no idea what to expect after huge drops, especially following the shake-up in China’s economy.
“The market was over-priced to begin with and now profits have weakened and we’ve got a Federal Reserve that’s raising rates,” Goss says. “This is not a time to be buying or selling, like the old saying, don’t try to catch a falling knife.”
In the January numbers, Creighton’s Rural Mainstreet Index fell for the fifth straight month and is now at the lowest level since August of 2009.