Economic Trends 
March 2021 | Creighton Institute for Economic Inquiry  

Creighton’s monthly survey of supply managers and procurement experts in nine Mid-America states indicates economic growth is in a range indicating the regional economy is experiencing a very strong economic rebound. The overall index from Creighton’s monthly survey of bank CEOs in rural areas of 10 states climbed above growth neutral for February with some of the best farm numbers since 2013. 

Creighton University
Jack MacAllister Chair in Regional Economics
Misery Image
From the Desk of Professor Ernie Goss
State Misery Indices: New York Most Miserable, Vermont Least Miserable

Economist Arthur Okun created the Misery Index in the 1970s to calculate how the average U.S. resident was doing economically speaking. It was calculated by adding the unemployment rate to the inflation rate. 

In the accompanying table, I calculate my alternative Misery Indices by adding each state’s latest Covid-19 death rate to the state’s most recent unemployment rate. Thus, higher rates indicate higher degrees of economic misery for the state.
No surprise here, New York citizens are suffering the highest degree of misery, while Vermont residents are experiencing the lowest level of economic misery. 

Interestingly, the most miserable states are also the states that appear to have enacted the most restrictive economic lockdowns.

To investigate this hypothesis, I list in the table, WalletHub’s index of COVID-19 economic restrictions by state published March 2, 2021 with the lower WalletHub index indicating the more restrictive the state economy.  

Virginia and Hawaii had the most restrictive economies, while Iowa and South Carolina had the least restrictive economies. 

The correlation coefficient between WalletHub’s lockdown index and COVID-19 death rates (not listed) is 0.07, indicating only a very slight positive relationship between the two factors.  However, the correlation coefficient between the Misery Index and the lockdown index is a stronger -0.31, indicating higher lockdown indices (i.e. less restrictions) result in lower economic Misery Indices.

Table 1: Professor Ernest Goss' "Alternative Misery Indices" reflecting COVID-19 death rate to unemployment rate. View larger table.
Number of the Month

Fully 50% of the world’s advanced semiconductor chips are produced by Taiwan. China is increasing its threat levels to reunite with what it regards as the renegade nation of Taiwan. The U.S. shortage will only soar higher.

Goss Eggs 
Recent Dumb 
Economic Moves

Five reasons why the Biden $1.9 trillion is a HUGE mistake.

It will pay a high share of the jobless to remain unemployed rather than seeking a job--cost $300 billion.

It sends $350 billion
to state & local governments, much of it going to big overspending states.

It provides $40 billion for higher education including provision for student loan forgiveness.
“If you borrowed it, you pay it back” (Goss).

The bill includes $130 billion to allow for a return to full-time, in-person teaching at K-12 schools. 
“They should have gone back just as we have in higher education" (Goss).

Most importantly, contrary to modern monetary theorists, someone has to pay for it later with higher inflation, taxes, or interest rates
(or all three).

Manufacturing Soars: Inflation Gauge Rockets to Record High
February survey highlights:
  • Creighton’s regional Business Conditions Index climbed into a range indicating very strong growth.   
  • The wholesale inflation gauge soared to a record high.
  • More than eight of 10 supply managers reported supply bottlenecks and delays for the month.
  • Shipping and transportation delays were named as the top issue accounting for supply bottlenecks. 
  • A weak dollar bolstered new export orders.
  • According to U.S. Bureau of Labor Statistics data, manufacturing wages for production workers in the region expanded by 3.6% since the onset of COVID-19 in March.

Rural Mainstreet 
Economy Expands Again:Economic Outlook Soars to Highest Level Since 2011

February survey results at a glance:
  • Overall index rose to its highest reading since January 2020.
  • Business and economic outlook soared to its highest level since March 2011.
  • Bank CEOs estimated 2021 cash land rent for non-irrigated, non-pasture land at $218.
  • Rural Mainstreet retail sales remain very weak.
  • The February farmland price index climbed to its highest level since May 2013. This is first time since 2013 that Creighton’s survey has recorded five straight months of above growth-neutral farmland prices.
  • Bankers expect farm equipment sales to expand by 3.8% over the next 12 months.     

View the complete Rural Mainstreet Report.
The Outlook

Professor Goss' Forecast - March 2021:

  • Since the presidential elections, the yield on U.S. long-term Treasury bonds has expanded from 0.83% to 1.71%. I expect that yield to climb by another ¼% (25 basis points) by the end of Q2, 2021. Mortgage rates, which have not expanded yet, will rise by 25 basis points by the end of Q1, 2021.
  • Annualized and seasonally adjusted GDP growth for the first half to range between 8% to 10%.
National Association of Business Economics (NABE) SUMMARY:

  • “NABE panelists have grown more optimistic about the prospects for economic growth in 2021,” said NABE President Manuel Balmaseda, CBE, chief economist, CEMEX. “The median forecast calls for a 3.4% annualized growth rate in the first quarter of 2021 for inflation-adjusted gross domestic product, or real GDP. The panel has become more bullish about 2021 as a whole. The median real GDP growth estimate for 2021 is 4.8%, compared to the 3.8% forecasted in the December 2020 survey.”
  • “While NABE panelists have become increasingly optimistic about future GDP growth, their views on the job market are less so,” added Survey Chair Holly Wade, executive director, NFIB Research Center. “Despite unemployment projected to decrease every quarter through 2022, 59% of panelists do not anticipate a full recovery in the job market to pre-pandemic employment levels until 2023 or later.
  • “About half of the respondents considers the balance of risks to economic growth in 2021 to be to the upside, whereas fewer than one-quarter expects the balance to be to the downside,” continued Wade. “Panelists point to a large fiscal stimulus program and a faster vaccine rollout as the main upside risks.”  
Image - Groups Stick People
The Good

  • Total non-farm employment rose by 379,000 in February as the unemployment rate remained steady at 6.2%.
  • February’s Purchasing management indices (PMI) for both ISM’s national survey and Creighton’s Mid-America were in a range indicating very healthy manufacturing growth.
  • Over the past 12 months, according to the Case-Shiller national home price index, housing prices expanded by 10.4% in December (one of the highest on record).

Downward Arrow - Image
The Bad

  • The Consumer Price Index (CPI) climbed by 0.4% in February. Too much inflationary pressures.
  • U.S. payroll employment expanded at a snail’s pace of 50,000 jobs and 406,000 workers left the labor force.
  • Since the onset of COVID-19, the federal government has implemented over $6.0 trillion, or approximately 27.3% of total U.S. output (GDP). A record share of the economy.
Keep An Eye On

  • U.S. Inflation Report. On April 11, the U.S. Bureau of Labor Statistics releases it consumer price index (CPI) for March. Last month’s reading was too, too high.
  • U.S. Jobs Report. On April 2, the U.S. Bureau of Labor Statistics releases its job numbers for March. Another strong report will put upward pressures on long-term interest rates.    
  • Creighton’s Rural Mainstreet report. On April 15, Creighton releases its April survey results of bank CEOs in rural areas of 10 states in the Rocky Mountains and Plains states. Growth in the rural economy has been very strong and improving putting upward pressure on farmland prices.   
Ernest Goss, Ph.D. 
Email: [email protected]