(Omaha, Neb.)– The latest Mid-America Business Conditions Index for Iowa, Minnesota, and a number of other states in the region shows the overall index of economic activity was still above growth neutral in June but is slowing. The index for June was 50.8, down from 51.3 in July.
Creighton University Economist Ernie Goss says a survey of supply managers turned up concerns similar to those in previous surveys…
“Number one, of course, they’re supply managers and they see supply chain disruptions as the major threat to their business, to the economy, that’s four out of 10. Three out of 10 named labor shortages. So even though the economy is slowing down, businesses out there are still seeing labor availability being a real challenge. Two out of 10 said higher inflationary pressures. That’s certainly high on their list. And finally, one out of 10 named higher interest rates. So that’s what we’re seeing at least for the month of June.”
Goss says the inflation rate should continue to drop…
“And I expect that when the CPI is released for the month of June, that will be released in July, I expect that number to be two tenths of one percent over the course of that one month. Of course that’s moderate. If you multiply that by 12, you get 2.4 percent, almost down to the Fed’s target. So the Fed’s getting their way, we’re moving toward their target of two percent, the Consumer Price Index up by two percentage points over the year.”
Even though inflation is dropping, Goss says based on what he’s seeing right now he expects the Fed could increase interest rates another quarter of a percent at their meeting later this month. Goss says that would cause further pressure on the financial and real estate sectors.
