A monthly survey of supply managers in nine Midwest and Plains states including North Dakota indicates a higher risk for recession this year.
The overall index in Creighton University’s Mid-America Business Conditions survey sank to 47.1 in December from 48 in November. Any score above 50 on the survey’s indexes suggests growth, while a score below 50 suggests recession. It’s the worst back-to-back monthly readings since the early days of the coronavirus pandemic, and the index has declined seven of the past nine months.
The survey “is flashing recession warnings for 2023,” said Creighton economist Ernie Goss, who oversees the survey. “Not since April and May of 2020, the middle of the 2020 recession, has the overall index fallen below growth neutral for two straight months.”
About 60% of supply managers who responded to the December survey expect a recession this year.
The survey’s business confidence index, which looks ahead six months, decreased from 25 in November to a “very weak” 23 in December.
“Confidence indices for each month in 2022, all below growth neutral, are the worst string of readings since the 2008-09 recession,” Goss said.
North Dakota’s economy tailed off after three straight months of readings above growth neutral. The state’s index sank to 45.8 in December from November’s reading of 53.5. Components were: new orders at 36.5, production or sales at 39.1, delivery lead time at 51.5, employment at 52.3 and inventories at 49.4.
The latest U.S. Bureau of Labor Statistics data indicate that North Dakota’s labor force participation rate is 0.9 percentage points lower than its prepandemic level. This indicates that 3,660 people in the state remain out of the workforce, thus contributing to the state’s labor shortage.
Survey data comes from the Bureau of Labor Statistics. The monthly survey covers Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota. The full report is at https://www.creighton.edu/economicoutlook/midamericaneconomy.
Falling inflation is a welcome sign that the Federal Reserve’s sharp interest rate hikes are having their intended effect, Cleveland Fed President Loretta Mester (MESS-ter) said, and validates the Fed’s forecasts that inflation will steadily decline this year. But further rate hikes are still needed, she says, to decisively crush the worst inflation bout in four decades. “We’re beginning to see the kind of actions that we need to see,” Mester said in an interview Tuesday. “Good signs that things are moving in the right direction…I think that that’s important input into how we’re thinking about where policy needs to go.” Other Fed officials, too, have said recently that they were encouraged by a series of milder readings on inflation and wage growth.
Source: bismarck tribune
