After another year filled with supply chain troubles and global health concerns, the economic outlook for 2022 in Iowa and for the Midwest isn’t rosy, according to Creighton University economist Ernie Goss.
“The outlook depends heavily on what happens with the South African strain of COVID-19, the variant there,” Goss says. “Even with that, I’m still expecting slower growth in the first half of 2022. It will slow even more, obviously, if we see that expanding in the U.S.”
The monthly Creighton survey of supply managers in Iowa and eight other states in the region is showing strong growth, but it’s bogged down by continued transportation troubles and labor shortages.
“One out of four of the supply managers expect the supply chain delays that we’re currently now experiencing to improve in the first half of 2022,” Goss says. “More than 50% of supply chain managers expect these supply chain disruptions, supply chain bottlenecks to get worse.”
According to the U.S. Bureau of Labor Statistics, Iowa’s seasonally adjusted manufacturing employment rate was down by fewer than 500 jobs from October to November, or only about two-tenths of one-percent. On the national front, the Gross Domestic Product is booming.
“The oddity of it is, we’ve got GDP back to above pre-pandemic levels, but employment? Not there,” Goss says. “We’re still seeing reluctance to return to work. We’ve got a lot of retirements. We’ve got individuals leaving the workforce.”
Goss says job gains for Iowa’s nondurable goods producers, including food processors, were more than offset in the past month by losses for the state’s durable goods manufacturers such as metal producers. Also, inflation levels are worsening and keeping prices on a wide range of products high.
The region’s wholesale inflation gauge for November hit 92.9 on a zero-to-100 scale.
“We’re seeing some of the highest numbers we’ve recorded here at Creighton University since we began the survey more than 25 years ago,” Goss says. “I would say it’s the most consistent upward price pressures we’ve recorded in the last three decades.”
The survey’s overall Business Conditions Index for the Midwest, which also uses a zero-to-100 scale, dropped from 65.2 in October to 60.2 in November. The overall index for Iowa tumbled even further, from 67.8 in October to 59.4 in November.