Creighton survey finds growing fears of looming recession

As we head into the final two months of 2024, typically the busiest months of the year for many retailers, a survey of business leaders in Iowa and eight other Midwestern states points to a looming economic downturn.

Creighton University economist Ernie Goss says the Business Conditions Index grades the region’s economy on a zero-to-100 scale, with 50 being growth neutral. It’s risen slightly from around 48 in September to 51 in October, just barely into growth territory.

“The overall reading, and that’s true for the national number and that’s true for our regional number, vacillating up and down, below and above growth neutral,” Goss says. “That’s the fifth time this year, and of course, that’s 10 months, the fifth time this year the index has been above growth neutral. Of course, that means five times -below- growth neutral as well.”

Goss says supply managers remain pessimistic about the economic outlook, with many expecting a recession, or a sharp dropoff in the next six months. He says the region’s employment index slumped below growth neutral for the 10th straight month in October.

“The U.S. manufacturing sector has lost 43,000 jobs this year alone, that’s three-tenths of one-percent, five out of the last nine months we’ve lost jobs, the U.S. has lost jobs,” Goss says. “The region is down 3,700 jobs, which is also identically three-tenths of one-percent. We lost jobs for four of the last five months.”

The Creighton survey found four in ten Midwestern supply managers named supply chain disruptions as the top challenge to their firm over the next year, and Goss says interest rates are a key factor.

“Long-term interest rates are rising, even though the Federal Reserve is cutting rates, they’re cutting short-term rates at the same time long-term rates are going up,” Goss says. “I expect those long-term rates to continue to move higher, and we’re going to see mortgage rates approach 7% and of course, that’s going to put a little dent in housing and we’ll see that in housing sales, home sales.”

Iowa’s overall number fell from around 43 in September to 48 in October, still below growth neutral and still “weak,” according to Goss. The latest U.S. International Trade Administration data finds Iowa’s manufacturing sector saw a drop in 2024 year-to-date exports of $954-million from the same period in 2023, a drop of more than eight-percent.

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