A new survey of Iowa business executives found that Iowa’s economic outlook for the next quarter was the weakest it has been since 2009.
The Iowa Business Council’s Economic Outlook Survey for the first quarter of 2020 came in at 37.5. Anything below 50 is considered a negative statement on the economy.
The COVID-19 outbreak got much of the blame. The index was at 60.09 at the end of last year.
The survey measures members’ expectations for sales, capital spending and employment for the next six months. The council represents the chief executives of Iowa’s 23 largest companies, including firms in banking, agriculture, finance, utilities and manufacturing.
The economic outlook indices for sales, capital spending and employment each fell below 50, down a few points from the previous quarter.
Executive Director Joe Murphy said even though this was the weakest index reading since the Great Recession, his group is confident Iowa will weather the economic storm.
“This is unlike 2008,” Murphy said in an interview. “We are in a much stronger financial position, our banks have much more capital. The Fed is much more active.”
The question is how long the economic pain lasts. “This is a global pandemic,” Murphy said. “That is very difficult to foresee and plan for.”
Murphy said IBC members are generally still operating, but have taken as many precautions as they can to protect workers and the public. Many are still on the job, producing electricity, processing insurance payments or making products. “You can’t build Pella windows at home,” Murphy said.
“Iowans are resilient and so are our companies,” Murphy said. “It’s a very difficult and trying time for all Iowans. We will come out of this in a good spot. We came back from 500-year-floods, tornadoes, and the farm crisis. Iowa always comes back.”
IBC reported some businesses have lost revenue due to COVID-19, but many expect losses to mount as the pandemic proceeds. Iowa businesses have faced government closure mandates, worker shortages and disruptions in supply shipments. Many expect those factors to worsen.
“We need to get people back to work as soon as possible,” Murphy said. “How quick will the recovery be, we don’t know.”
Operations that for years have complained about difficulties in hiring enough qualified workers now wonder if the workforce will be weakened further by the virus outbreak, Murphy said.
Because of the uncertainty over how long the outbreak will last, the businesses cited unfavorable domestic and global economic outlook as their primary business challenge.
The survey was sent to IBC members in mid-March as the pandemic spread across the United States.