October Survey Shows Midwest Economy Still Weak

(Radio Iowa) The monthly survey of business leaders across Iowa and eight other states finds the region’s economy remains weak and improved only slightly. Creighton University economist Ernie Goss says the survey ranks the economy on a zero to 100 scale, with 50 being growth neutral.

“The overall index rose from September’s 52.7 to October’s 53.1, but this is only the second increase in the last seven months,” Goss says, “so I would still place the manufacturing economy of the Mid-American states in a slow-to-no growth stage.” Iowa’s overall Business Conditions Index for October sank below growth neutral to 49.8, falling from September’s 50.9. Supply managers across the region were asked about what they see as their biggest obstacles for the rest of the year and Goss says their responses focused on four key areas.

“Supply chain disruptions remains the number-one challenge, one third indicated that,” Goss says. “Labor shortages, about one-fourth indicated that. Higher input costs, of course, growing there. That rose significantly from last month up to almost one-third, and then higher interest rates, likewise, increased as the Federal Reserve raised rates.” One telling factor on the October survey, Goss says, is how the Economic Confidence Index is at its lowest point since March of 2020 when the wide impact of the pandemic first kicked in. Also, hiring levels in Iowa and across the region are still lagging.

“Some of that, just the inability to get the workers, find the workers, hire the workers, that’s a big, big issue,” Goss says. “The regional employment is still down from pre-COVID levels, and we’re seeing a loss since COVID of about 77,000 workers across the nine-state region.” Inflation rates are still high, but Goss says they’re dropping and are now at the lowest level since August of 2020. He predicts inflation may reach six-percent during the fourth quarter.