OMAHA — The index used by Creighton University to gauge the health of the economies of nine states, including Nebraska, fell below growth neutral for the first time in 30 months.
Arnie Goss, director of Clayton’s economic forecasting group, said it was a “recession warning flasher” for the first half of 2023.
Nebraska Falls, overall
The Forecast Group updates the Central America Business Conditions Index monthly based on survey responses from supply managers across Minnesota to Arkansas.
Results released Thursday showed the overall index, or business barometer, slipped from 53 in October to 48 in November. On a scale of 0 to 100, 50 is growth neutral.
Especially in Nebraska, the statewide figure fell below growth neutral for the third month in a row, dropping from 43.2 in October to 42.8 in November.
Components of the Nebraska index include: Production or sales recorded 45.9. inventory, 39.7; employment, 31.7; and new orders, 46.9.
Regionally, Goss said the manufacturing sector was showing weakness, signaling a possible recession.
“Raise your ugly head”
Across the nine states, he said the latest composite index was the lowest since May 2020, when the COVID-19 pandemic began.
“When asked about the biggest threats from the end of 2022 to 2023, rising input prices were by far the number one threat,” said Goss. “Inflation still rears its head, supply officials say.”
Supply managers also expressed concern about the recession, supply chain disruptions, rising interest rates and labor shortages. In fact, 65% of his companies report a shortage of candidates for open jobs.
Since the first months of the pandemic in June and July 2020, the survey has not recorded two consecutive months of unemployment for the region.
But when looking at employment numbers by individual state, Goss said Nebraska is among four out of nine, with employment figures above pre-pandemic levels.
(Others with higher nonfarm employment rates compared to pre-COVID Arkansas, Missouri, South Dakota)
Slightly increases confidence
He said personal wages in Nebraska rose 4.1% over the past year, while manufacturing wages rose 6.2%, according to the U.S. Bureau of Labor Statistics.
Survey responses indicated a slight return to economic optimism as captured by the business confidence index, which rose to 25 today from 18.5 in October. Goss said he believes the numbers are still weak.
“The monthly confidence index for 2022 is all below the neutral growth rate, the worst set of numbers since the 2008-09 recession.,” He said.
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