OMAHA, Nebraska (PNN) - August 1, 2012 - The ongoing drought, combined with global economic turmoil, is hurting business in nine Midwest and Plains states and boosting worries about the ongoing Second Great Depression.
The region's overall economic index for July plunged below growth neutral for the first time since 2008. The index hit 48.7, compared with 57.2 in June.
The survey of business leaders and supply managers uses a collection of indexes ranging from zero to 100. Any score above 50 suggests growth while a score below 50 suggests decline for that factor.
Creighton University economist Ernie Goss, who oversees the survey, said the drought will hurt farm income while the strengthening dollar hurts exports. Therefore, two of the most important positive factors in the region's economy are being undermined.
The survey covers Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.
The drought already is negatively affecting ethanol and food processors in the region. Goss said many ethanol plants have either closed temporarily or reduced operations because of the higher corn prices that come with the drought.
Hiring has slowed in the region, and Goss said he expects jobs numbers to decline in the months ahead. The survey's employment index declined to 51.1 in July from June's relatively strong 61.8.
The July inventory index dropped to 45.7 from June's 53.9. Goss said that suggests businesses were reducing inventory because they anticipate slower production in the months ahead.
