USA is experiencing severe recession and slowdown since the beginning of this year. Almost every day, we are hearing news about financial crisis faced by majority of Americans. And now, a survey conducted by Creighton University has predicted that the Midwest and Plains regions of America are expected to experience sluggish economic growth in the coming months.
In this survey, a score above 50 indicates growth, while a score below 50 suggests a recession. It is worth noting that the index began the year at 47 in January. The survey data is sourced from the U.S. Bureau of Labor Statistics, and it encompasses Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma, and South Dakota.
- The overall index of the Mid-America Business Conditions May survey declined from 54.8 in April to 51.3, but it remained above the growth-neutral threshold for the fourth consecutive month.
- The business confidence index of the survey, which forecasts the next six months, has declined to a “very weak” level of 29.6, compared to April’s figure of 31.9.
- The wholesale inflation gauge for the month has increased to 74, rising from April’s figure of 67.4.
- Supply managers have reported an average wholesale growth of 5.6% for products and services over the past 12 months.
- However, these managers anticipate a cooling of wholesale price growth to 2.9% in the next 12 months.
- For the fourth consecutive month, the regional hiring gauge indicates slow growth, registering a reading of 52.3, a marginal increase from April’s 52.2.
- Employment in the manufacturing sector within the region has grown by 2.5% in the past year, while the average hourly wages for manufacturing workers in the same region have risen by 5.7% during the same period.
- The regional inventory index saw a notable increase, rising from 54.3 in April to 59.1, reflecting the levels of raw materials and supplies available in the region.
- Unfortunately, the trade numbers for the month remained weak. Although new export orders experienced a slight improvement, rising to 46.2 from April’s 42.9, they still reflect a relatively low level of demand. On the other hand, imports showed some growth, climbing to 52.8 from 47.0 in April.
- Furthermore, there was a decline in new orders, dropping to 52.4 from 58.7 in April.
- The production or sales index also decreased significantly, sinking to 52.1 from 60.9 in April. Additionally, the speed of deliveries of raw materials and supplies experienced a notable decline, falling to 41.0 from April’s 47.9.
- Approximately 40.9% of supply managers expect a decline in economic growth over the next six months.
Also Read: Rising Financial Service Expenses take a Toll on Majority of Americans
Creighton economist Ernie Goss, who supervises the survey, expressed cautious optimism regarding the growth and inflation outlook. He stated that while it is too early to determine whether the Federal Reserve has successfully achieved a soft landing, the results from surveys over the past few months have shown some promise in terms of growth and inflation trends. Goss accurately predicted the Federal Reserve’s decision to keep short-term interest rates unchanged in their mid-June meeting, although officials did hint at the possibility of rate hikes later in the year.
Midwest and Plains regions of America are expected to experience sluggish economic growth in the coming months. Goss stated that inflation had been significantly elevated in previous periods; however, it has persisted above the targeted threshold established by the Federal Reserve. Contrary to their expectations, inflation has not experienced the desired reduction as anticipated by the Federal Reserve.
Employment levels and growth in the manufacturing business sector remain steady primarily because manufacturers are holding onto their existing workforce. This means that regional manufacturers are maintaining their current employment levels out of concern that they may struggle to rehire once business activity increases.
Manufacturing firms have started restoring their inventory to normal levels. This positive development is expected to support moderate sales growth in the coming months. The decrease in various indices indicates a decrease in disruptions within the supply chain and improvements in delivery efficiency.
Source: Creighton University Survey
