OMAHA, Neb. - Economic signs from a nine-state Midwest region reflect those seen before the recession in 2001, says a Creighton University economics professor. But North Dakota continues to show growth.
"Over the past two months, the region's leading economic indicator has taken a sharp, negative turn from September's healthy 56.7," said professor Ernie Goss, who released his Mid-America Economic Survey on Monday. "The pattern we are tracking is very similar to that recorded shortly before the recession of 2001," he said.
The Business Conditions Index ranges between zero and 100. An index greater than 50 indicates growth.
North Dakota's overall index rose to 71.0, compared with 69.3 in October, said Goss, who oversees the survey.
"I expect North Dakota to continue to benefit from a strong Canadian dollar, which makes North Dakota goods less expensive for its northern neighbors," he said.
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For the region, the Business Conditions Index for November dropped below growth-neutral, to 49.2 from a weak 50.1 in October, Goss said. It's the first such sub-50 reading since 2002, he said.
Goss, who is director of Creighton's Economic Forecasting Group, compiles survey information from supply managers and business leaders in the nine-state Mid-America region. The survey states are Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.
"In my judgment, the likelihood of a recession in early 2008 has now risen to well above 50 percent," Goss said. "Unfortunately, there is always a delay in recognizing a recession. The last recession in 2001 had already ended before the National Bureau of Economic Research, the recession-designating organization, had acknowledged that it had begun."
Last month Goss said he believed the regional economy could slide into a recession early next year if the overall readings from November and December surveys come in below 50.
Goss noted in Monday's report that inflationary pressures at the wholesale level rose to the highest level since March, pushed up by oil prices.
"The prices-paid index, which tracks the cost of raw materials and supplies, expanded to 78.0, its highest level since March of this year and up from Octoberhttp://www.outlook-economic.com
