Political rhetoric aside, America IS recovering – albeit slowly – from the worst economic downturn since the Great Depression.
Historically, RURAL America lags well behind more populous URBAN areas during recoveries, but things have been different this time.
Corn and soybean prices soared to all-time highs this past summer; and – despite the worst drought in 50 years – net farm income and farm land values also are expected to remain in, or near, record territory.
This week though, a study of business conditions in portions of the Midwest and Great Plains revealed prospects for strong economic growth – at least through the end of the year – are not good.
A leading economic indicator in middle America crept above growth neutral this week, for the first time in several months, but not by much.
Creighton University’s “Business Conditions Index” registered a weak 50.4 for the month of September. Anything above 50 indicates expansion. The survey spent most of the past year in the mid to upper 50’s, but slipped into negative territory three months ago.
The index is an average of new orders, production or sales, inventories and employment.
Economist Ernie Goss conducts the monthly survey of nine MidAmerican states and he isn’t optimistic about the fourth quarter, predicting virtually no economic growth.
Dr. Ernie Goss, Creighton University: “Our numbers indicate that for the fourth quarter, which of course we’re moving into now, is going to be almost flat. Perhaps a half of a percent growth, that is nothing, nothing to write home about. And this economy is moving into recession if something is not done, about those very significant tax hikes and spending cuts slated to go into effect in January of 2013.”
According to Goss, September had the lowest employment tally in three years as the region shed jobs. The last time the index this low on jobs, the U.S. was just beginning the long road to recovery.
And Goss says the manufacturing sector—which helped lead the country back from the economic abyss--- now is losing jobs.
Dr. Ernie Goss, Creighton University : “The economy, that’s GDP, the sales, market value of goods and services, that’s looking like almost flat. Then you look at job growth, oh no, we’re talking about maybe losing jobs for the fourth quarter. Now we’ll have to wait and see, but we’ve been almost flat, U.S. wise, and the region, the 9 state region, over the last two or three months. What I’m expecting is flat for the 4th quarter meaning no job growth for the 4th quarter of 2012.”
Exports have helped buoy the U.S. economy in recent months, but even that market is slowing.
On the positive side of the equation, domestic energy production is bolstering the economies of North Dakota and Oklahoma. Iowa also is helping offset big contractions in other states. While the drought of 2012 has had major implications for the state’s grain and livestock producers, it has yet to slow the state’s agricultural equipment manufacturers. Nevertheless, it has negatively influenced retail sales on Main Street.
Anticipating slower sales in the months ahead, supply managers have trimmed inventories over the past three months. But they’re not the only ones with a gloomy short-term outlook.
The upcoming elections, the looming expiration of Bush-era tax cuts and the debt crisis in Europe are creating a “perfect storm” of economic uncertainty.
Dr. Ernie Goss, Creighton University: “If the Congress and the President don’t get back to Washington and do something about the fiscal cliff, we’re going to see recession in 2013. I see little chance of avoiding a recession if we don’t get some, with these numbers. We’re talking about a weak economy, weak regional economy, weak national economy, you lay on top of that, spending cuts and tax increases, that’s a recipe for recession.”