A monthly survey shows the economic pictures for Iowa and the Midwest are darkening, with a few sunny breaks in the clouds.
Creighton University economist Ernie Goss says the overall figures for Iowa sank during May, as did the numbers for the nine-state region. Goss says the survey of business leaders and supply managers showed hiring slowed during the past month.
“Regional employment still remains well below pre-pandemic levels, about 1.4% below pre-pandemic levels,” Goss says. “We’re still moving. We’re crawling out of this economic downturn, but we’re doing somewhat better, and we’ll see how that trends out in the weeks and months ahead.”
According to the survey, the greatest economic threats for the rest of 2022 include supply chain disruptions, inflationary pressures, higher interest rates and labor shortages.
“Inflation will remain high for the rest of the year, but I expect it to come down a bit,” Goss says. “There’s some indicators that inflation is declining. Economic growth will likewise slow for the rest of the year but we’re still in the positive range right now. Supply chain disruptions and delays will lengthen, but I think even there, we’ll see some improvements.”
The inflation index for May rose to 91.7 on a scale of zero to 100, that’s up from 89.7 during April. The survey asked supply managers how much more they expect prices to rise during the second half of the year.
“For the next six months, they expect 8.7% growth. Of course, you double that and annualize it, that’s 17.4% in the wholesale price index. So that’s some big, big time numbers in terms of growth and wholesale prices,” Goss says. “So of course, that will spill over into consumer prices in the weeks and months ahead.”
Again, using the zero to 100 scale, Iowa’s overall economic index for May fell to 59.6, dropping significantly from 69.8 in April.
Despite that, Goss says: “Both durable and non-durable goods manufacturers in the state are growing at a solid pace with companies linked to the farm economy expanding at a healthy rate. The state’s leisure and hospitality industry has benefited from this healthy growth, but employment in this industry remains 8,300 jobs (5.7%) below pre-pandemic levels.”