The Elbert Files: Our strange economy

These are extraordinary economic times.

Bankruptcy filings are still very low, even as Iowa’s homeless and food insecure numbers rise.

Those contradictions are just two things I’ve seen in Iowa’s economic analysis.

Looking around, it was clear that Iowa had weathered the epidemic well.

The state’s farm economy is in good shape with high corn and soybean prices. And weather permitting, it could stay that way for some time, or at least as long as Ukrainian farmers are locked out of world markets by Russian aggression.

Government employment statistics also look good.

The number of Iowans working in manufacturing, marketing and finance — the three main sectors — have all rebounded to pre-pandemic levels.

The only industry sector that has not been retrenched at all is information services, which include workers in newspapers, magazines and other businesses involved in gathering and providing information.

Employment at newspapers and other news providers has worsened since the bottom of the recession, continuing a trend that predates health concerns by decades.

Also Read :  Donner Guitars Brings Dynamic and Innovative Designs to Music Lovers

According to state labor market data, there were 33,500 Iowans working in information services in 2008. This number dropped to 20,900 at the end of 2019 before the pandemic took hold. Four months later in April 2020, which was the cause of the recession in Iowa, employment fell to 18,800. And this fall, it dropped again to 18,300.

Some sectors of our economy have recovered, but not completely. Most notable are health services. Health care employers in Iowa lost 19,500 positions during the pandemic and replaced 12,300 workers from 198,000 before COVID.

Iowa’s monthly employment numbers are a snapshot of the economy and do little to reveal the deep structural problems that fuel inflation fears and climate concerns. They also do not reflect the academic problems that produce low test scores across the board from elementary schools through graduate level programs.

Also Read :  Kwasi Kwarteng resigns as Liz Truss moves to reverse his policies

The amount of damage caused by inflation varies greatly depending on income. High food and gas prices are wreaking havoc on low-income families, increasing demand at food pantries across the country and contributing to homelessness.

Over the past year, a growing awareness of climate change and the problems it causes has spread throughout rural Iowa.

Farmers are concerned because the drought is causing navigation problems on the Mississippi River. When the water level drops too low, boat traffic slows and stops, increasing transportation costs, which eat into farm income.

Botanists may have found ways to make corn and soybeans more drought-tolerant, but there’s not much they can do to replenish the river during a drought.

Another concern is the threat of a new recession. Many economists now expect a nationwide recession to occur by 2023. And it may come sooner, rather than later.

It doesn’t bode well for Iowa, where growth numbers turned negative at the end of 2021 and rebounded on June 30, the latest date for which state-level data is available.

Also Read :  Sakhalin oil project hints at the potential collapse of Russian output when new EU sanctions take effect

Another way to read Iowa’s numbers is that, following the sharp slowdown that accompanied pandemic shutdowns in 2020, unprecedented spending helped Iowa businesses bounce back in early 2021 with growth that hasn’t matched recent quarters.

If that’s the case, new federal spending on infrastructure, and strong farm profits this year — assuming we can get some sales on the Mississippi River — should keep Iowa businesses growing through 2023, even if the rest of the country experiences a recession.

What happened in the late 1970’s when global demand for Iowa farm products led many to believe that Iowa’s farm economy was recession proof.

And so it was, until changing conditions in world markets led to the farm crisis of the 1980s.


Leave a Reply

Your email address will not be published.