(Omaha, Neb.)– After falling below growth neutral for three straight months, the Creighton University Mid-America Business Conditions Index, a leading economic indicator for the nine-state region which includes Iowa, rebounded to its highest level since July of last year. The Business Conditions Index, with 50.0 representing growth neutral, climbed to 56.1 from 47.0 in January.
After dropping below growth neutral for three of the last four months, the regional hiring gauge rose above the growth neutral threshold to a tepid 52.8 from 46.3 in January. Economist Ernie Goss says labor shortages continue to be a major issue…
“Still seeing an inability to find and hire those qualified workers, particularly in rural areas of the region, difficulty again, finding those workers who have the skills necessary for doing the job. And we asked about entry level wages, and about half, half of the supply managers, half the firms, reported that they were having to increase entry level wages above, above the rate of inflation to get workers to come in and interview, so that’s a challenge for those businesses out there.”
Goss says the wholesale inflation gauge for the month of February soared to 80.6 from January’s 74.1 and December’s 52.1. He expects another increase in interest rates as a result…
“The Federal Reserve will raise rates. I expect a half a percent increase. Now that’s not what the market’s expecting right now. Right now the market expects a 25 basis point increase; I expect a 50 basis point increase. Short term interest rates as a result will rise by another half a point the next day, that will be March 23rd, you’ll see the prime interest rate rise by 50 basis points and of course that’s pushing up the cost of carrying your balances on credit cards.”
Looking ahead six months, Goss says economic optimism increased to a very weak 38.1 from 25.0 in January…
“The outlook, at least our numbers now are pointing toward sideways movement in the overall economy. In other words, even with the really significant bounce for the month of February we’re still talking about slow to no growth in the regional economy. Residential housing, obviously, is in a recession right now. We’re probably going to record a sixth straight month of declining housing prices.”
More specifically for Iowa, Goss says the state’s Business Conditions Index for February climbed to 53.2 from January’s 47.0.
