The economic recovery is picking up steam. That according to Creighton University Economist Dr. Ernie Goss who survey’s business leaders in a nine state area on a monthly basis. Goss says the January Business Conditions Index for January expanded to 54.7 which is up from December’s 50.3. An index of 50.0 is considered growth neutral.
“It was up pretty briskly. I think the recovery underway right now is going to be modest, even with these pretty good numbers. I was encouraged by these numbers. It is some of the best numbers we’ve gotten in a long time. This downturn, economic downturn, which began in December of ’07, at least for the nation, now looks like it is coming to an end. The mend is underway.”
Goss says the regional employment index rose above growth neutral for January. .
“We did. Our employment index is above growth neutral so that was job additions. That was for the jobs we surveyed. For the over-all economy, each of the nine states when you put them all together, we are really not adding jobs but the companies we surveyed, which are leading economic indicators. This is right now for them but is going to be later on for the entire state economy.”
Goss says these numbers show that layoffs could decrease.
“This month we asked the supply managers about layoffs. We compared that number to November when we asked the same question. A lot less layoffs expected for 2010. That has come down so that is looking better. We asked about pay raises and we are even seeing that turning upward. A higher share of supply managers expecting a pay raise and that is very good. Although it is still not as strong as we would like to see it. We are talking about pay raises for 2010 are going to come in at 3 to 4 percent. Maybe a little bit lower than that, 2 to 3.”
When it comes to inflation, Goss expects the consumer level to top 3.3-percent as early as the middle of 2010. This is a full percentage point above the Fed’s acceptable level.
“That number is up above 70 and that is pointing at least to the pipeline. That is what we look at and the Fed, the Federal Reserve met last week and they said they see it subdued. Well understand they are motivated to make us all think it is subdued because one we, all of us consumers, believe that inflation is up, then we inflation expectations get higher and it results in higher inflation. It is a self fulfilling factor we are seeing there.”
Goss says the global economy continues to push higher and new export orders are up several points however, supply managers surveyed continue to reduce inventory.
The states included in the Mid-America region include Nebraska, Iowa, Arkansas, Kansas, Minnesota, Missouri, North Dakota, South Dakota and Oklahoma.