July Mid-America Business Index indicates economic slowdown
(Omaha) — One of KMAland’s leading indicators is showing worrisome signs in the Midwest economy.
July’s Mid-America Business Conditions Index fell below the growth-neutral threshold after five straight months of above-neutral numbers. A survey of supply managers and manufacturers in nine Midwestern states, including Iowa, Missouri and Nebraska, the index dropped from 50.8 in June to 46.1 last month. A reading of 50.0 represents growth neutral. Speaking on KMA’s “Morning Line” program Thursday morning, Creighton University Economics Professor Dr. Ernie Goss says it’s the lowest overall reading since the beginning of the COVID-19 pandemic in May, 2020.
“Exports are slowing down growth there,” said Goss. “We’re also seeing the higher interest rates cutting into the growth in manufacturing. At the U.S. level from the Bureau of Labor Statistics–not our survey–three straight months of job losses in manufacturing.”
Goss says about half of those surveyed predict a economic recession in the second half of this year.
“Whether it’s slightly positive growth or slightly negative growth in a recession,” he said, “it still feels like an economic slowdown. Just yesterday (Wednesday), Fitch downgraded the U.S. debt from triple A to double A. That means higher interest rates. So, higher interest rates are going to be cutting into what goes into the economy.”
In addition to higher interest rates, Goss attributes the index decline to decreased productivity in the workforce. While saying President Biden’s economic policies are to blame for the economic slowdown, Goss adds there’s several factors out of the president’s control.
“For example, the global economic slowdown,” said Goss. “China is slowing down, and potentially moving into a recession. Europe–Germany, for example–is not good at all. So, we need to see some growth there. But, for my money, as far as what’s inside the administration control, is cut back on some of these regulations. You’re moving in the wrong direction. More regulations mean slower growth.”
He points to increased regulations on the auto industry as an example. Goss says one hopeful sign is that the Federal Reserve isn’t expected to raise interest rates at its September meeting. You can hear the full interview with Dr. Ernie Goss here:
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