The Midwestern economy is headed toward recession — soon, according to the latest projection from Creighton University and its monthly survey of business leaders in Iowa and eight other states.
Creighton economist Ernie Goss says the overall Business Conditions Index rose slightly for the region into the positive growth category, but Iowa’s economy is still showing negative growth. “The outlook is for a slower economy, a slower growth economy,” Goss says, “and the numbers are really pointing toward a recession as early as the fourth quarter of 2023, but more likely in the first half of 2024.”
The hiring trends for the Midwest during September were “not good,” Goss says, though the figures were up slightly from August. “We’ve seen probably three consecutive months of job losses, but they’re minor, they’re small job losses,” Goss says. “I don’t want to overstate this. The job market remains reasonably strong, well, strong is not the right word. It remains — solid would even be an exaggeration, but it’s still not in recession territory.”
The Midwest’s regional manufacturing economy has weakened from earlier in the year, Goss says, and it’s weakened from the same period last year, while inflation remains troublesome.
“With oil prices up significantly in the $90 to $100 range, that’s putting upward pressure on the wholesale inflation gauge,” Goss says. “Even with that, though, I think the Federal Reserve is going to hold off on a rate hike at their meetings on October the 30th and November 1st, but I do expect a rate hike by the Federal Reserve in December.”
According to U.S. International Trade Association data, Iowa’s manufacturing exports expanded from just over $9-billion for the first seven months of 2022 to 10-billion for the same period in 2023. That’s a growth rate of better than nine-percent.
For the first seven months of each year, the state’s leading manufacturing export, machinery, soared by almost 24-percent between 2022 to 2023. On the zero-to-100 scale where 50 is growth neutral, Goss says Iowa’s Business Conditions Index for September rose to a weak 48.5, up slightly from 47.9 in August.