Drought dragging down Midwest regional economy, study says

[one...two...tree 2,762]

Kansas City Star (Steve Rosen)

08/01/2012 12:34 PM

The relentless drought and deteriorating global economic conditions are combining to take a toll on businesses in a nine-state area that includes Kansas and Missouri, increasing concerns about another recession.

The July Mid-America Business Conditions Index plunged below growth neutral for the first time since 2009. The index hit 48.7, compared with 57.2 in June. Any score above 50 suggests growth while a score below 50 suggests decline.

The index has now declined for the third straight month, indicating a “rising likelihood” of a recession, said Ernie Goss, the Creighton University economist who oversees the monthly survey of supply managers.

Goss noted that the regional economy has benefitted in recent years from healthy exports and robust farm income. However, he said that “these two economic drivers are clearly moving in the negative direction.”

Recent gains in the dollar have made U.S. goods less competitive abroad, Goss said. “Combine that with drought conditions and we will see farm income take a hit and that will spill over into other industries in the region,” Goss said.

Drought conditions are particularly hurting ethanol and food processors in the region, the economist said. Ethanol producers have either temporarily closed or cut back operations because of lower oil prices and a lack of corn or higher corn prices.

Businesses are also becoming more cautious in hiring, the survey said. “While government data on state job growth for July will be positive but tepid, I expect the numbers to move negative in the months ahead,” Goss said. “Very weak new orders and production for July will mean job lesses for firms in August.”

In Kansas, the business condition index slipped to 47.8 in July from June’s 51.7 reading. Businesses linked to food production and agriculture reported being hit hard by the drought, and Goss said he expects overall state economic growth to be “flat to negative” in the next three to six months.

Missouri’s business index fell to 50.2 in July, or slightly above growth neutral, from June’s 59.1. “One supply manager reported the shutdown of auto plants for July vacations pushed growth lower,” Goss said. “The purchaser expects to see production increases for August and September.”

Edited August 2, 2012 by Commie Appeaser

[Darnell 8,479]

yup. Sorry. No Rain, no crops.

It'd be a cool thing to 'hold water' after each major flooding - and then run pipes in parallel to the oil pipelines throughout the nation, pumping the water to where it's needed.

Not the first year, alas, that this is being reported.

[Ban Hammer 13,555]

it's raining right now.

[Penny Lane 8,159]

We're supposed to get rain today. I'll believe it when I see it.

[natty bumppo 297]

it's raining right now.

want some more?

we are definitely out of drought. heck we just dumped boatloads of h2o out into the gulf.

a couple of weeks ago the local creek was above the 100 yr flood stage and rapidly closing in on the 500 yr flood mark. glad the rain moved to the sw part of houston ... otherwise might have needed to build an ark.

[Ban Hammer 13,555]

want some more?

we are definitely out of drought. heck we just dumped boatloads of h2o out into the gulf.

a couple of weeks ago the local creek was above the 100 yr flood stage and rapidly closing in on the 500 yr flood mark. glad the rain moved to the sw part of houston ... otherwise might have needed to build an ark.

a bit more is helpful

[natty bumppo 297]

a bit more is helpful

on its way ...

*runs outside to perform a rain dance*

[lostinblue 1,989]

The liberals will blame the Kenyans failed economic policy on anything but where the true blame should be.Maybe he can hold a second cabinet to study the problem'.

[Penny Lane 8,159]

The liberals will blame the Kenyans failed economic policy on anything but where the true blame should be.Maybe he can hold a second cabinet to study the problem'.

What?

Is it Obama's fault it's not raining?

[^_^ 5,021]

What?

Is it Obama's fault it's not raining?

he is to be addressed as "the kenyan"

[I AM NOT THAT GUY 5,715]

California is looking pretty sweet now when you Midwestern types get hungry. I hope you all know which whine goes best with that humble pie.

[Mr. Big Dog 10,747]

What?

Is it Obama's fault it's not raining?

What? You didn't know?

[Ban Hammer 13,555]

California is looking pretty sweet now when you Midwestern types get hungry. I hope you all know which whine goes best with that humble pie.

we're not going broke.

[I AM NOT THAT GUY 5,715]

we're not going broke.

You might be after you get the bill.

we're not going broke.

We are not broke, we still have lots of checks left.

[Darnell 8,479]

it's raining right now.

how much, in litres?

and - is yer city 'holding' water, or no ?