December is traditionally a very busy, profitable month for retailers, but the latest economic survey for Iowa and eight other Midwestern states shows another dip in the business barometer for the final month of 2022.
Creighton University economist Ernie Goss says the state and regional economies fell further below growth neutral, or 50 on the 0-to-100 scale, during December, pointing to higher recession risk for 2023. “These are the lowest readings we’ve recorded since the pandemic, in other words, that’s May of 2020,” Goss says. “So, things are not looking good. The economy is very likely to slow down significantly in the first half of 2023 and certainly the second half of 2023, so it was not a good signal.”
Arkansas, Missouri, Nebraska and South Dakota are all seeing employment levels now that exceed pre-pandemic levels, but the survey shows Iowa has yet to hit that mark. Goss says the region is still lagging several thousand jobs, but hiring numbers did rise during December.
“Companies are still hiring. Job additions, employment additions are not, I won’t call it strong but it’s surprising the strength we’re seeing there when everything else is not good,” Goss says. “But when we asked about applicants for job openings in the company, 63% reported a shortage of applicants for any job openings they had.”
The future outlook is far from glowing, Goss says, as the overall Business Conditions Index has fallen for seven of the past nine months. Plus, he says about 60% of supply managers surveyed expect the economy to slump into a recession in 2023. “We’re talking about really the higher, higher probability of a recession,” Goss says. “I think the probability of a recession is now well above 50%. We’re going to see slow-to-no-to-negative growth. The housing sector’s already in a recession, manufacturing is likely to enter a minor recession.”
According to U.S. Bureau of Labor Statistics, Iowa’s current labor force participation rate is two percentage points lower than before the pandemic. Goss says that indicates more than 34,000 Iowans remain out of the workforce, thus contributing to the state’s labor shortage.