CORONAVIRUS

Midwest economy takes another hit in April due to coronavirus impact

Manufacturing expected to see impact in May

Ernie Goss
Ernie Goss

April was another month of economic carnage in Iowa and eight other Midwestern states due to the impact of the coronavirus shutdown on consumer-related businesses.

The April Creighton University Mid-America Business Conditions Index plummeted to the lowest level since February 2009, almost the middle of the Great Recession.

The overall index — which ranges between zero and 100 — slumped to 35.1, from 46.7 in March

“According to Creighton’s April survey of regional manufacturing supply managers, the coronavirus had a less significant impact on the manufacturing sector than other areas of the economy more directly tied to the consumer,” said Ernie Goss, Creighton professor of economics who compiles the survey results each month.

“This is a consumer-led recession with manufacturing lagging. I expect manufacturing to worsen in the next month.”

Goss added that 50 percent of supply manager reported business stoppages for their vendors in Creighton’s April survey, while more than one-third detailed shipping problems.

The April employment index slumped to a record low of 26.2 from March’s already weak 34.7.

“In the middle of March, U.S. Department of Labor data showed that only 164,040 workers in the nine-state region were unemployed and receiving unemployment insurance benefits,” said Goss.

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“This represented only 1.3 percent of individuals covered by the unemployment insurance systems. By the first week of April, 980,196 workers were receiving unemployment insurance benefits, or 7.5 percent of covered workers.”

Looking ahead six months, economic optimism, as captured by the April Business Confidence Index, rebounded to a still weak 45.5 from March’s record low 14.5.

“The federal stimulus plan, the Federal Reserve monetary incentive programs, and the rebound in U.S. stock markets boosted confidence from March’s record lows,” Goss said.

Iowa’s Business Conditions Index sank to 34.4 in April, from 45.8 in March. Components of the overall April index were new orders at 23.7, production or sales at 19.7, delivery lead time at 67.4, employment at 25.6, and inventories at 35.5.

“Between the second week of March and the first week of April, workers in the state receiving unemployment compensation rose from 27,800, or 1.8 percent of workers covered by the unemployment system, to 127,300 individuals, or 8.3 percent,” Goss said.

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