Skip to comments.Economist: Midwest Recovery a 'Fragile' Process[Economic Recovery More Fragile Than Anticipated]
Posted on 09/01/2009 11:01:28 AM PDT by Son House
The herky-jerky results of a nine-state economic survey suggest that recovery is at an uncertain stage in the Midwest and Plains.
The Business Conditions Index for the Mid-America region slipped below growth neutral again in August, to 48.4, compared with 51.7 in July and 49.3 in June.
An index of 50.0 is considered growth neutral.
The latest figure surprised Creighton University economist Ernie Goss, who oversees the survey of supply managers and other business executives.
He said in a report released Tuesday that the August figures and other data point "to an economic recovery that is much more fragile than I anticipated."
The survey states are Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.
Business conditions index shows fragile recovery
An index number higher than 50 indicates an expanding economy in the next three to six months.
The Mid-America Business Conditions Index was 48.4 in August, down from 51.7 in July and 51.4 in August 2008.
This months decline is a real surprise and, combined with readings over the past several months, points to an economic recovery that is much more fragile than I anticipated, Goss said of the region. Compared to the recovery from the 2001 recession, the current rebound appears to be much more subdued. It is clear that the significant pullback in farm income is producing negative impacts on businesses that we survey that have ties to this sector.
Goss said that he thinks the worst of the Mid-America regions job losses is over.
However, job gains are not in the picture for the near term, he said.
Kansas’ business conditions move higher
The state’s Business Conditions Index was 41.0 in July, up from 37.3 in July and a regional low of 29.7 in June.
The index is derived from a number of measures including new orders, production, delivery lead time, employment and inventories.
A score of 50 or more indicates an expansionary economy in the next three to six months.
“Last month, I projected that the state’s unemployment rate would peak at 7.4 percent,” Goss said in a news release. “I now think I was too optimistic, with the rate likely to top out at 7.8 percent.”
I wonder why they did not have a survey in Ohio, Indiana, Michigan??? O maybe they know the unemployment is so high they would mess the other results up real bad!!
Creighton Report Shows Surprising Summer Economic Downturn
One potential bright spot. The August employment index showed a still weak but improving jobs picture, inching higher to 44.2 from 43.0 in July.
Economist: Midwest recovery a ‘fragile’ process
Goss said surveys over the past several months “are pointing to a weak economic rebound with elevated inflationary pressures in the months ahead.”
He said he expects the Federal Reserve to raise short-term interest rates or reduce its purchases of mortgage-backed securities before the end of the year.
“The Fed has got to prepare markets for a reduction in this record monetary stimulus, or risk allowing inflation to get out of control,” Goss said.
Despite the apparent uncertainty suggested by other results in the survey, the survey respondents remained optimistic.
Economist: Midwest recovery a fragile process
Supply managers in the nine-state region are still holding the line on inventories, as evidenced by the August inventory index of 39.8, compared with 45.5 in July.
“We have yet to record any restocking of inventories for raw materials and supplies,” Goss said. “However, I expect inventory replenishments in the final quarter of 2009 to help stimulate the regional economy.”
But, but, what about the Klunkers for Chocolate program?
Didn’t that increase the ration from 45 to 28?
The August employment index showed a still weak but improving jobs picture, inching higher to 44.2 from 43.0 in July.
Must be harvesting season for some crops
These states are still failure conservative reddish states ...ie. they are not total welfare sewers.
They will hold up better than midwest DEM union stooge strongholds like IL, MI, OH, and western NY.
What recovery? How the heck does 500,000-600,000 job losses every month translate into recovery?
And, the dow is down yet again today, -169 points. That’s about the only sure thing you can bet on these days...
Illusions do tend to be fragile.
As rough as this may be for the people who are facing difficulties, it’s far better for them and for their children than if we had economy strong enough that obama could get away with the massive socialism he wants to institute. I’m okay with a slow, fragile recovery if it keeps a lid on obama’s plans for our country.