Quad City Times, IA
12-10-07
Reports paint contrasting picture of Iowa economy
By Dan Gearino | Monday, December 10, 2007 | 1 comment(s)
DES MOINES — Two reports released this week show Iowa’s economy going in
opposite directions.
The Iowa Business Council — a coalition of the state’s 20 largest employers —
says its members are more optimistic about the economy than they were three
months ago.
But business leaders had a less rosy view in Creighton University’s MidAmerican Economy report, which showed a big shift downward in the economic
outlook from the previous month.
The two reports arrived at a time of high anxiety about the national economy,
brought on by the crisis in mortgage lending. The question for Iowa is how much
the national concerns will affect the state economy.
“You could argue we’re in a period of confusion,” Iowa State University
economist David Swenson said.
Both surveys boil the results down to one number, an economic outlook index on
a scale from 1 to 100. Anything above 50 shows optimism about the economy.
The Iowa Business Council has an index of 66.3, up from 64.7 the previous
quarter. The number is based on a survey of 19 of the council’s 20 members,
which are all large companies.
The Mid-American Economy report has an index of 49.2, down from 54.1 the
previous month. The number is based on a survey of roughly 100 supply
managers at Iowa companies of all sizes.
So who’s right?
Swenson said they’re both right in a way. He said the Iowa Business Council
report reflects the fact that larger companies are more optimistic than companies
in general.
The bottom line, he said, is that an economic slowdown is coming and nobody
really knows when it will arrive or how bad it will be.
Creighton University economist Ernie Goss, the lead author of the Mid-American
Economy report, said larger companies are more optimistic partly because they
are more closely aligned with the global economy, which is doing better these
days than the American economy.
Goss said there isn’t enough evidence to say the Iowa economy has crossed a
turning point toward a downturn. But he said the indicators are pointing in that
direction.
“We economists always do well when we’re talking about things going straight
down or straight up,” he said. “It’s these turning points that are hard forecast.”