Drought, low export demand sap Midwest economy

Published 11:50 am Tuesday, September 4, 2012

OMAHA, Neb. — An August survey suggests that the continuing drought and lessening export demand for U.S. products are among the drains on the economy in nine Midwest and Plains states, according to a report released Tuesday.

The Mid-America Business Conditions Index remained below growth neutral for a second month in a row, the first time that’s happened since July 2009, organizers said. The overall index rose to 49.7 in August from 48.7 in July. June’s figure was 57.2.

“Supply managers report that drought conditions, U.S. economic uncertainty and slowing global demand are restraining growth,” said Creighton University economist Ernie Goss, who oversees the survey. “However, the index would have to drop into the low 40s before I would anticipate a return to recessionary economic conditions.”

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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. The survey covers Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.

Economic optimism, as indicated by the August business confidence index, rose slightly to a weak 44.3 from July’s 38.0.