Creighton economist says state starting year on a positive note

OMAHA — Creighton University economist Ernie Goss says the economy in Iowa and other Midwest states headed into the new year on a positive note.

Goss does a survey of purchase managers, that showed a number above neutral growth for December. “A little bit stronger than anticipated. The national number which came out this week as well, it was weaker than that, it was in the it was below growth neutral,” Goss says.

The Federal Reserve announced it was going to cut interest rates six to seven times in 2024, Goss is skeptical of that. “I chuckled, because that’s the only reason that would happen is if we moved into a recession. Now, is that the case? Well, our numbers show a softer landing than that,” he says.

He says the Fed is expecting inflation to continue to be an issue. “They’re expecting things to soften a bit, inflation coming down, but still above the target,” he says. “The target is two percentage points, and we’re still above that right now. And now with these recent supply chain disruptions in the Red Sea, and other supply chain disruptions, that’s gonna push tend to push prices up. We’ve already seen oil prices move up a bit.”

Goss says the federal government pumped money into the economy to avoid the recession. “95% of economists expected a recession 2023. Now, why did we not get it? Well, the reason is you can’t have a recession when you have spending at the federal level that we have had in 2023, which we still have,” Goss says.

He says the federal government’s putting the money into the economy at the same time the Federal Reserve is cutting the money supply, and that is going to continue. “I say the federal government is going to put more and more money in there and the likelihood of a recession has been reduced,” he says. “It’s an election year, and politicians don’t get reelected, the probabilities of reelection go down in a recession, certainly.”

Goss says Iowa and other Midwest states have so far weathered those economic moves better than other areas of the country.