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The State of Iowa's Economy (September 2009)

posted on September 17, 2009 at 12:16 PM

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The Washington DC-based Brookings Institute says Des Moines' relatively strong employment picture and rising home prices have helped keep the capitol city in the top 20 best performing metro areas in the nation. The Institute looks quarterly at the 100 largest metro areas in the nation.  

But that's only one measure. An Omaha-based economist, Ernie Goss does a monthly report on the state—as well as much of the Midwest.

 

Ernie Goss spends a lot of time on his phone and his computer from his Creighton University office in the economics department.

Around the first of each month for the last 15 years, the activity turns to the study of the heartland's economy. 

On this day he's reading over data for the “Business Conditions Index for Mid-America., a report he produces monthly. It's an analysis of a basic 9 question survey of nearly 1,000 purchasing managers from industries, agriculture and around a dozen banks in this 9 state region.

Ernie Goss/Creighton University Economist: “These are the men and women at the front line of the economy. If they're buying, that soon spills over into the economy. That’s the theory behind it. Its a leading economic indicators. We’ve been doing it for, since 1994. We get a good beat on the economy.  And during that time we’ve had two recessions, we picked them both up in advance."

After a group discussion with other Creighton academics, the survey is published and sent to about 5,000 recipients.

From his Omaha office just across the Missouri River from Council Bluffs, he also talks about Iowa, a lot.

Goss: “Its not been the growth engine that Omaha has been. Des Moines is slower growth and some of it has been drained to West Des Moines.”

His most recent survey of August activity looked at production orders, exports and inventories.

The Index fell for the first time since January.

A number above 50 indicates economic growth or expansion. But the Midwest numbers in yellow, show 48.4 in August, signaling a shrinking economy.

The Iowa trend line in blue shows growth in June, but then falling off in July and August.

Goss adds Iowa is being pulled down by agriculture, but other factors started this downslide.

"It really began with the floods of last year in June.  At least according to our survey and lots of other data that you had a real hit to the economy and then on top of that then you had the down turn the overall economy and back to the farm equipment area, bio-fuels production, ethanol has not been -- it's been a tough couple of years for ethanol and bio-fuels.  On the flip side of it -- the good side is you got wind energy. I'm not certain about the long-term outlook for that because of course what the economy is a scale.  I just -- the numbers right now, the re-capture period seems a bit too long to me, but they got a lot of folks out there investing in it.  That's spilling over."

Paul Yeager:  “Iowa in terms of diversifying its economy.  Is Iowa diverse enough?”

Goss:  “My concern for the Iowa economy would be the dependence or continuing dependence on the farm sector -- diversify from that.”

Yeager: “What are the holidays going to look like and how do people prepare?”

Goss: "Santa will have shorts on.  By that I mean you’re going to see Christmas sales being pushed up before we even have a frost.”

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