For the first time in months, Iowa’s economic numbers improved during May along with that of the Midwest, but the state and region are still struggling under fallout from the pandemic.
Creighton University economist Ernie Goss says the monthly survey of business owners and supply managers in Iowa and eight other states shows promise, though there’s still a long way to go toward recovery. “The recession is principally right now focused on the consumer portion of the economy,” Goss says. “The manufacturing sector, not as much, although the manufacturing sector is certainly in a recession.”
Iowa’s Business Conditions Index, or the overall index, was still below the growth neutral point of 50 on a zero-to-100 scale. It rose to a weak 41.9 in May from 34.4 in April, according to Goss. Iowa’s unemployment rate had been among the lowest in the country until the coronavirus, but now, jobless numbers statewide are approaching 200,000.
For the region, Goss says the job index remains well below the “growth neutral” point of 50 on the scale, but it’s starting to rebound. “The overall index, ranging between zero and 100, the May number was at 40.0 and that’s up from April’s 26.2,” Goss says. “April’s reading was a record low.”
Joblessness is its worst in Iowa and nationwide since the Great Depression, Goss says, far worse than the most recent recession of 2008-2009. A vast amount of the people who are able to continue working are no longer leaving their houses for their jobs.
“We asked the supply managers about working from home and 62.5%, almost two thirds, indicated they were moving activities to the home from their office,” Goss says. “We’re seeing that, even in manufacturing, so that’s quite a change from what we saw in previous months.”
Iowa’s unemployment rate — not seasonally adjusted — jumped from 3.6% in March to 10.7% in April. Goss says the state lost 177,000 jobs during the one-month COVID-19 span.