By CINDY GONZALEZ
Nebraska Examiner
OMAHA — Creighton University’s latest survey of manufacturing supply managers in a region including Nebraska, Kansas and Missouri signals a rising risk this year of a recession.
“Not since April and May of 2020, the middle of the 2020 recession, has the overall index fallen below growth neutral for two straight months,” said economist Ernie Goss, director of Creighton University’s Economic Forecasting Group. “Things are not looking good.”
Each month since 1994, the Creighton group has surveyed manufacturing supply managers in a nine-state region, using findings as the basis of its Mid-America Business Conditions Index. The index is considered a barometer of economic health for the region stretching from Minnesota to Arkansas.
Housing woes spill into manufacturing
Overall for that area, the December business conditions index that was released Tuesday showed a decline in seven of the past nine months.
Goss said about 60% of supply managers surveyed expect the economy to slump into a recession this year.
As the economy slows, he expects long-term interest rates to drop. Short-term interest rates, on the other hand, are being pushed up by Federal Reserve actions, Goss said.
Negative conditions in the regional housing sector are spilling into the manufacturing sector, Goss said. And he predicts gas prices to rise in 2023 as a result of increases in the tax rate on gasoline and refineries going offline for maintenance.
For Nebraska specifically, the state’s business conditions index climbed from a score of 42.8 in November to 49.9 in December but remained below growth neutral for a fourth consecutive month.
Using a range of zero to 100, a reading of 50 represents neutral growth.
South Dakota shines
Of the Mid-America states, Goss said that Nebraska is among four (along with South Dakota, Missouri and Arkansas) that saw employment numbers above pre-pandemic levels.
Among other highlights of the December report was a 2022 review showing South Dakota as top economic performer of the region’s nine states. Minnesota was second, followed by Nebraska, Kansas, Oklahoma, Iowa, Missouri, North Dakota and Arkansas.
Looking forward six months, economic optimism as captured by the index’s confidence category sank to a reading of 23, compared to 25 for the region in November.
“Confidence indices for each month in 2022, all below growth neutral, are the worst sting of readings since the 2008-09 recession,” Goss said.