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Inflation no longer among top concerns of Iowa executives, quarterly survey finds

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Inflation no longer among top concerns of Iowa executives, quarterly survey finds

Inflation has dropped out of the top three concerns among Iowa business leaders, according to the latest quarterly survey from the Iowa Business Council.

The third quarter report, released Monday, shows IBC members, comprised of executives from 22 companies that are major Iowa employers, have increased expectations for sales and capital expenditures while their hiring expectations are slightly lower than in the most recent previous survey, released in July.

“As Iowa continues to navigate constantly changing dynamics in the economy, IBC executives remain positive on future growth opportunities in our state. While employment expectations have cooled for two straight quarters, capital expenditures have rebounded from the second quarter.” Phil Jasper, president of Cedar Rapids’ Raytheon division of RTX and chair of the Iowa Business Council, said in a news release.

More: Food inflation: As grocery prices continue to soar, see which states, cities have it worse

“The capital expenditure increase is significant as Iowa’s leading business leaders project increasing investments in equipment, technology, and other assets to increase growth and opportunity in Iowa despite continued trepidation in the national economy,” Jasper added.

The report measures IBC member expectations for sales, capital spending and employment for the next six months. If the index measures above 50, sentiment is positive. The survey’s overall economic outlook index is 56.67, an increase of 1.41 points from the previous quarter but down by more than three points from the historical average of 60.38. Still, all three categories remained in positive territory.

Survey conducted before interest rate cut

IBC President Joe Murphy said that in order to protect the survey from bias, it was conducted before the Federal Reserve announced Sept. 18 that it was lowering interest rates by half a percentage point.

“As money becomes cheaper, they (company executives) will probably have an even more optimistic outlook on their capital expenditures,” Murphy said.

He said companies’ spending plans are “all over the board,” from additions on buildings to investing in new technology.

Less concern among Iowa’s executives regarding inflation is a good sign, she said, with the national inflation rate at 2.2% earlier this month, close to the Federal Reserve’s goal of 2%.

“I think the fact that our members didn’t report that that (inflation) was as big of an issue this time as the previous reports going back to 2021, I think is significant,” he said. “I think it is a further indicator that we’ve managed the inflation or we’re getting into a more normal inflationary period as opposed to the huge increases that we’ve had in the past.”

Workforce shortages will be top political focus

The survey also marks the first time this year that concerns about an unfavorable domestic economy were listed as the primary challenge facing Iowa businesses, showing up on the responses of 50% of those surveyed. The other top two concerns, listed by 45% of the IBC executives, were an unfavorable business climate in terms of the supply chain, infrastructure and federal regulations, and workforce attraction and retention.

Murphy said the surveys of Iowa’s business executives help the IBC develop its political priorities. At the state level, the group’s focus will be on issues and policies relating to workforce shortages, he said.

“I think workforce will again be front and center, child care front and center, again freeing up Iowans from other things that they might be experiencing so that they can participate in the labor force,” he said.

He said he looks for the trend of company-based child care options to continue, with several of the IBC member companies already offering such services.

“It’s tough,” he said. “You know, our member companies are in the business of making windows or providing health care, providing financial services, or providing retail goods and services, not in the child care business, but they’ve recognized that it’s in their interest from a labor perspective to get involved in that and maybe partner with the community entity to have a partnership where they can share child care cost or partner with an organization that will run the center but with some investment from the from the corporate entity.”

Murphy said the IBC also will be looking at housing issues.

“As we look at the workforce issues and then also the unfavorable domestic economy, spurring construction and refurbishing existing structures I think will be at the top of our of our list from a housing policy perspective, as well,” he said.

Business Council hopes to be ‘voice of reason’ on immigration reform

Immigration reforms will top IBC’s priority list at the federal level, he said.

“There are a number of things that we can do with visa and expedited processing and working through our foreign-born talent that is being educated at Iowa universities to make sure that we retain those individuals here in key industries in particular,” he said. 

The business community needs to provide “the voice of reason and share the economic and the business case for immigration reform in this county,” he said.

More: Iowa makes case for blocked ‘illegal reentry’ immigration law before 8th Circuit Court

Murphy said the need for additional workforce through immigration is evidenced by the state’s labor participation rate declining each month so far this year. It’s a trend economists attribute to an again workforce reaching retirement age.

“I think that’s really something that that we are continuously trying to talk to our federal delegation and other delegations around the country on the important aspect that immigration has, the important positive aspect that immigration has on our on our workforce, our communities and our business climate” Murphy said. 

Kevin Baskins covers jobs and the economy for the Des Moines Register. Reach him at kbaskins@registermedia.com.

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