Business Council Paints Rosier Picture on Economy

October 8, 2020

Perry Beeman, Iowa Capital Dispatch 

Executives of Iowa’s 22 largest companies are more bullish on the next six months after the beginning of the year saw the worst economic darkness since the Great Recession. 

The Iowa Business Council’s quarterly outlook survey found its members expecting to hire at a greater clip in the next six months and to boost capital spending. 

Joe Murphy, council executive director, said the businesses, among the state’s largest employers, have their financial feet under them after months of adjusting their expenses and using federal stimulus money to help recover from the economic turmoil brought by the COVID-19 pandemic since spring. 

“I think businesses and individuals are beginning to find ways in which to plan for the future,” said Murphy, who previously worked for the Greater Des Moines Partnership and Iowa State University. “That is bringing a level of optimism that we’ve not seen in the last months. 

“While we’re not out of the woods with respect to the pandemic and certainly the recession, our members feel like the future is very bright in our state,” Murphy said. “This recession is not like the one in 2009. This is more of a natural disaster.”

The third quarter survey found the overall economic outlook index at 58.71, up 17.46 points from the second quarter. Anything above 50 is considered a sign of a positive outlook.

The last time the overall index topped 50 was in late 2019. Then the coronavirus pandemic caused widespread layoffs, furloughs, and a huge spike in Iowa’s usually low unemployment rate. 

The first quarter index in 2020 fell to 37.5, the lowest level since 2009, before rising to 41.25 in the second quarter. 

In the third quarter survey, council members say attracting and keeping workers is still a challenge. 

More than half, 55%, said they expect sales to be higher in the next six months and 41% expect added hiring. Capital spending should rise, too, in the opinion of 45% of respondents. 

“I think people have gotten over the shock” of the beginning of the pandemic, Murphy said. “I think businesses have been able to adapt to the newfound reality that is COVID-19.”

Murphy said council members are hoping Congress will approve another stimulus bill. The initial stimulus package was “absolutely critical” to the businesses surviving the downturn, he said.

His comments came hours before President Trump ordered congressional Republicans to stop negotiations on a stimulus package until after the election. The stock market immediately fell on the news.

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