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Report: Economic conditions in Midwest take leap forward

September 4, 2018

OMAHA, Neb. (AP) — Economic conditions in nine Midwest and Plains states took a leap forward last month, according to a survey report issued Tuesday.

The Mid-America Business Conditions Index jumped to 61.1 in August, compared with 57.0 in July, the report said. It’s the 21st straight month the index remained above growth neutral 50.0.

The regional economy continues to expand “at a very healthy pace,” said Creighton University economist Ernie Goss, who oversees the report.

“However, I continue to expect expanding tariffs, trade restrictions and rising short-term interest rates from a more aggressive Federal Reserve to slow regional growth to a more modest — but still positive — pace in the months ahead,” Goss said.

The survey results are compiled into a collection of indexes ranging from zero to 100. Survey organizers say any score above 50 suggests growth in that sector. A score below that suggests decline. The survey covers Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.

A little more than half the supply managers who responded indicated that recent trade tariffs and restrictions have begun to harm buying from abroad. But only one in five supported reducing tariffs and trade restrictions.

“I expect rising tariffs, trade restrictions and higher oil prices to continue to boost wholesale and consumer inflation growth above the Federal Reserve’s target,” Goss said. “I expect the Federal Reserve’s interest rate-setting committee to raise short-term interest rates by one-quarter of one percentage point at its Sept. 26 meeting.”

Looking ahead six months, the economic optimism index dropped to a still strong 60.8 in August from July’s 63.9.

Despite trade tensions and tariffs, Goss said, healthy profit growth, relatively low interest rates and lower tax rates have led to the “robust business confidence.”

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