Iowa's economy has likely cleared the recession's grip, a new state report shows. But expect Iowa's recovery to be long, without rapid job growth or a push to the state's income, economists say. "We're on the path to recovery, but we still have a long way to go to get back to normal," said Amy Harris, an Iowa Department of Revenue analyst. "A lot of people are still unemployed." For the first time since April 2007, a state index that tracks Iowa's economy showed all eight of its components - from farm profits to building permits and manufacturing hours worked - improved over the previous month.
Looking at longer trends, the December report indicates the state has escaped "recession territory," said Harris, who compiles Iowa's Leading Indicators Index. Charles Whiteman, an economist at the University of Iowa and interim director of the U of I's Institute for Economic Research, said, "All of those components moving in the right direction is really a good sign. "Our prediction since October has been that things were looking up." Iowa employment is expected to climb in the third and fourth quarters, inching 0.2 percent higher for 2010, the group said. Also, 2011 will bring "recovery numbers" in job growth, climbing 1.8 percent, Whiteman said.
Next year's projected job growth would outpace employment gains in 2007 and 2008 combined, the group's data show. "The recovery is beginning now," Whiteman said. "Recovery to what is the $64,000 question." Harris said the gains that Iowa experienced in December factor in the recession that began about a year ago. The index's monthly values are calculated using a 12-month rolling average. "If you look at things like building permits and unemployment claims, yes, they're positive contributors," she said. "But the levels are a long way from normal December levels."
For example, weekly unemployment insurance claims in December were 14.3 percent less than December 2008 claims, but they were 57 percent higher than the average December claims for 1987 to 2007. "We're seeing some strength, but it will take a while to get back to where we were in 2008," Harris said. Fred Abraham, an economist at the University of Northern Iowa, said Iowa may never see the return of some jobs, especially in manufacturing. "We've been losing jobs in manufacturing for a long time, both statewide and nationally," he said. "A lot of the goods we consume come from other countries. ... And productivity in manufacturing has increased."
Employment is always going to lag in a recovery, Abraham said. "The unemployment rate didn't rise as rapidly as output fell," Abraham said. "And when you get into recovery, the unemployment rate doesn't fall as rapidly as output rises. "You don't get the jobs back that fast. It's going to be a while before we get back to 4 percent unemployment rate in Iowa." Iowa's unemployment rate in December was 6.6 percent. In December 2008, the rate was 4.4 percent.
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Des Moines Register
Donnelle Eller
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