(Omaha) — Another leading economic indicator in KMAland is flashing recession warnings.
Creighton University’s Mid-American Business Conditions Index survey for January fell below growth neutral for a third straight month. The monthly survey of supply managers in a nine-state region–including Iowa, Nebraska and Missouri–sank from 47.1 in December to 47.0 this month. Creighton University Economics Professor Dr. Ernie Goss says the survey marked the lowest January reading for the index since the beginning of the Great Recession in 2008. He adds the overall index has now declined eight of the last nine months. In a recent interview on KMA’s “Morning Line” program, Goss says any recession in the Midwest won’t be as bad as other parts of the country.
“The economy’s still not looking that good,” said Goss. “But, in this part of the country, better than the East and West Coast, where a lot of job losses and job cuts have been announced. We’re not seeing as much in this part of the country. The ag sector seems to be holding up the overall economy. Manufacturing is reasonably good in this part of the country. But none the less, these higher interest rates are going to have some impact.”
Approximately 60% of supply managers surveyed expect the economy to slump into a recession this year. Goss cites the housing market as one economic sector already showing signs of a recession.
“Of course, the housing sector–even in this part of the country–is not doing well,” he said. “We’re talking about five straight months of downturns in housing prices. The housing sector, I will say, is in a recession right now–that’s housing construction, residential of course.”
Complicating matters is that the Federal Reserve–as expected–raised interest rates by a quarter of a percent Wednesday. And, Goss expects other interest rate hikes in the future.
“What it’s like is they (the feds) feel like they’ve got inflation at least some degree under control,” said Goss, “but, it’s sort of a like a campfire out there. When you think it’s all out, and you pour enough water on it–in this case, highest interest rates–they’re afraid it will flair back up. So, they’re going to raise rates a couple more times–and that’s a concern for the agricultural sector, and for the overall economy going forward.”
Though consumer confidence is up slightly from December, Goss says it’s still a very weak 25.0. He adds supply managers named supply delays and disruptions as the greatest threats for 2023.