Goss Report: Ag drives growth in Minnesota, Iowa

(Excerpts from the latest report on leading economic indicators by Prof Ernie Goss, economist, Creighton University)

Minnesota: Minnesota’s leading economic indicator was above growth neutral for the 18th straight month. The Business Conditions Index advanced to 55.2 from December’s softer 52.0. Components of the index for January were new orders at 56.0, production or sales at 61.9, delivery lead time at 58.3, inventories at 49.5, and employment at 50.5.  “The state’s agriculture is the second largest among the nine Mid-America states. Thus expansions among firms tied to agriculture and international markets have been an important component of Minnesota’s recent growth.  On the other hand, the state’s construction industry continues to slow overall state job growth. I expect the state to continue to add jobs for the first half of 2011. This pace will be stronger than the last half of 2010,” said Goss.

Iowa: For the 13th straight month, Iowa’s Business Conditions Index climbed above growth neutral. The index, a leading economic indicator from a survey of supply managers, climbed to 64.0 from 56.8 in December. Components of the Business Conditions Index for January were new orders at 78.2, production or sales at 68.0, delivery lead time at 65.8, employment at 53.5, and inventories at 54.6. “With the largest agriculture sector among the nine Mid-America states, Iowa’s industries linked to agriculture, except for food processing, have experienced very healthy growth over the past several months.  This growth will continue for the first half of 2011 particularly for durable goods producers tied to agriculture and the global economy,” said Goss.
 
Our Take:
It’s a story we need to repeat every day–the Midwest (and America) depends on agriculture–not just as our source of economical, abundant food, fiber and energy, but also as a source of economic strength. The investment in agriculture and value-added agricultural enterprises pays off handsomely–the result is maintaining strength through rocky economic times and emerging sooner from recession than would otherwise happen. Anyone who doesn’t think the farm safety net and public policy favoring farm-based energy are good investments should watch the Goss report and see how consistently agriculture figures as a positive force in our economy.

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