Editorial: Economy continues to confuse

There are myriad economic indicators that business leaders gauge to help them thoughtfully navigate an uncertain economy. Unfortunately, these indicators continue to confuse rather than provide a clear picture of where the economy is headed.

Take, for example, the important Iowa manufacturing Quarterly Business Survey by the Iowa Association of Business and Industry (ABI) which was released last week.

  • Survey results show 60% of respondents plan to make capital expenditures in the fourth quarter of 2022, down from 70% in Q3.
  • 56% of respondents expect the number of employees in their business to stay about the same, with 40% expecting numbers to grow.
  • 37% of respondents expect sales to expand in the third quarter of the year. This is a decrease from 48% in the third quarter and 60% for the second quarter of 2022. 
  • 18% expect sales to retract, a 5% increase from last quarter.

“As Iowa manufacturers continue to anticipate effects from inflation and experience supply chain hurdles, they are shifting their focus to absorbing the growth they’ve experienced over the last 12 to 18 months rather than expanding sales,” said Mike Ralston, ABI President, in a news release.

Workforce remains top concern

Meanwhile, the Des Moines Register reported that payrolls in the state are now up to 1.6 million in August, an increase of 3,800 from July, according to data released by Iowa Workforce Development earlier this month. The state has added 15,800 jobs since March.

Though it increased by a tenth of a percentage point in August, Iowa’s unemployment rate remains among the lowest in the country at 2.6%. The state’s rate hasn’t been this low since the winter of 2020 and is better than the overall U.S. rate of 3.7%. 

Rural Mainstreet Index falls again

Finally, the Creighton University Rural Mainstreet Index (RMI) fell for the fifth straight month, sinking below growth neutral for a fourth consecutive month, according to the monthly survey of bank CEOs in rural areas of a 10-state region released Sept. 15.

 The region’s overall reading for September once again sank below growth neutral to 46.3, but it was up from 44.0 in August.

The September RMI for Iowa increased to 48.0 from 40.1 in August. Iowa’s farmland-price index increased to 63.7 from August’s 63.5. Iowa’s new-hiring index for September dropped to 52.3 from August’s 55.9. According to the Office of Trade & Economic Analysis, Iowa has exported $1,441 million of agriculture products to date in 2022, which represents an expansion of 116.2% from the same period in 2019. 

Given all that, good luck determining where we are heading.