Economic Trends 
September 2021 | Creighton Institute for Economic Inquiry  

Welcome to our September report covering results from Creighton’s two August economic surveys. 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 positive, but slowing economic growth with significantly elevated inflation. The overall index from Creighton’s monthly survey of bank CEOs in rural areas of 10 states declined to a still strong reading with expanding farmland prices and agriculture equipment sales. 

Creighton University
Jack MacAllister Chair in Regional Economics
From the Desk of Professor Ernie Goss
Only 4 of 10 U.S. Households Paid 2020 Federal Income Taxes: Burden Fell on Workers Making Over $75,000

More than six out of ten U.S households paid no federal income taxes in 2020 due to declines in income, and boosts in government subsidies that wiped out tax liabilities. 

According to the Urban-Brookings Tax Policy Center, 106.8 million households escaped the federal income tax. This was up from 75.9 million in 2019. Brookings estimates the number of families owing no federal income taxes for 2021 will decline only slightly to 101.7 million, or 57.1%, owing a net $0.00.
And contrary to President’s Biden’s claim that high income workers are not paying their fair share, and should pay more, the data show the opposite. According to the Tax Policy Center, the top 20% of taxpayers paid 78% of federal income taxes in 2020, up from 68% in 2019. Furthermore, the top 1% of taxpayers paid 28% of taxes in 2020, up from 25% in 2019. And the trend over the decades has not been kind to families experiencing improving income levels by requiring them to pay a rapidly rising share of the federal income tax burden.  

For example, in 1979, the top one-fifth of income earners paid a tax rate which was approximately three times that of the bottom one-fifth of income earners. But 38 years later, the top one-fifth of income earners paid 20 times the tax rate of the bottom quintile of tax payers. 

Did shifting more of the income tax burden on to high income earners reduce income inequality over the period? Emphatically not! 
Between 1979 and 2019, the degree of income inequality, as measured by the U.S. Census Bureau’s Gini Coefficient, increased from 0.404 to 0.484 (a higher index indicates greater income inequality). But more importantly, not only has shifting the burden of income taxes from low to high income households failed to reduce income inequality, it has reduced the incentive to increase earnings via higher education/training, higher hours worked, or other work activities linked to income that benefit both the household and society. Accordingly, President Biden should reconsider his economic plan which punishes high income workers with a greater share of income tax burdens.
Number of the Month


The average price of a new car soared by $6,000 in August from the previous month to reach a record high of $41,378 per vehicle. The rise is attributed to a shortage of new vehicles stemming from a lack of semiconductors, according to research firm J.D. Power.

Goss Eggs 
Recent Dumb 
Economic Moves

President Biden plans to extend the reach of the IRS with an additional $80 billion into enforcement. He claims this will raise $700 billion in 10 years. The Congressional Budget Office (CBO) dismisses this estimate.
As part of his plan, President Biden wants banks to file paperwork every year on gross inflows and outflows for personal and business accounts with balances greater than $600. What’s the cost to banks and to the collective privacy of this nation? To quote George Orwell in 1984, “It was a bright cold day in April, and the clocks were striking thirteen.”
Grade=3.5 Goss Eggs.

Manufacturers Report Supply Chain Challenges: August Overall Index Indicates Slower Growth

August survey highlights:
  • Creighton’s regional Business Conditions Index climbed into a range indicating healthy, but slower, growth for the next three to six months.  
  • Supply managers reported supply chain bottlenecks represented the top challenge for the next 12 months. 
  • Approximately 94% of supply managers reported supply chain bottlenecks for the month.
  • Supply managers ranked soaring input prices as the second greatest challenge for the next 12 months.
  • Confidence index fell for the third straight month.

Rural Mainstreet 
Growth Slows in August:
Fewer Than 10% of CEOs Support $3.5 Trillion Infrastructure Bill

August survey results at a glance:
  • Overall index remains in a range indicating strong growth for the month.
  • Approximately 15.6% of bankers reported continuing drought conditions were the greatest threat to banking operations over the next 12 months.
  • Due to strong farm financial positions, 40.6% of bank CEOs see low loan demand as their bank’s greatest challenge over the next 12 months.
  • Only 9.4% of bankers support passage of the $3.5 trillion infrastructure bill currently before Congress.  
  • Home sales climbed to a record high for the month.

View the complete Rural Mainstreet Report.
The Outlook

Professor Goss' Forecast - September 2021:

  • While I expect solid wage growth for the rest of 2021, inflation adjusted wage growth will be close to zero, or even negative, due to soaring inflation.
  • The Democrat $3.5 trillion reconciliation infrastructure bill (i.e. passed without Republican support) will be scaled back to obtain Senator Manchin’s support. The Republicans and Manchin will save Biden from himself. 
  • The Fed will begin scaling back (e.g. tapering) its monthly purchases of MBS and U.S. Treasury bonds in the fourth quarter of 2021.

National Association of Business Economics - August, 2021 (Summary):
  • “NABE panelists’ views are split on whether fiscal and monetary policies are ‘too stimulative,’ or ‘about right’,” said NABE President Manuel Balmaseda, CBE, chief economist, CEMEX. “While 49% of respondents believe current fiscal policy is ‘too stimulative,’ nearly as many—45%—indicate current policy is ‘about right.’ Similarly, a slight majority—52%—of panelists believes current monetary policy is too stimulative, compared to 47% who say it is about right.
  • “Seventy-nine percent of respondents are in favor of employers requiring their employees to be vaccinated against COVID-19 before they return to the workplace,” Balmaseda added. “In addition, 69% of panelists think that the federal government should provide a standard document that individuals can carry and certify that they are vaccinated against COVID-19.”
  • “Nearly two-thirds of respondents believe that the Federal Reserve will be able to achieve its goal of inflation averaging 2% over time,” added Survey Chair Ilan Kolet, institutional portfolio manager, Fidelity Investments, “and more than half of respondents believe that inflation risks are to the upside. Almost three-fourths of the respondents believe the Fed should raise interest rates by the end of 2022.”
Mortgage Cost Image
The Good

  • The Case-Shiller home price index soared by 18.6% in June compared to 12 months earlier. Good news for home sellers, but obviously not for home buyers.
  • Initial filings for unemployment insurance for the third week in August fell to their lowest level since March 2020. Continuing claims also dropped to 2.75 million, their lowest level since pre-pandemic.
  • The nation’s inflation gauge (CPI), less food and energy, rose 0.3% in July. Not great, but down from 0.9% in June. 

Downward Blue Arrow
The Bad

  • August job additions of 235,000 was a disappointment with 728,000 jobs expected. The unemployment rate did fall to 5.2%. 
  • The August wholesale inflation gauges from Creighton’s and the national ISM’s surveys of manufacturing supply managers remained in a range indicating excessive inflationary pressures.  
  • The U.S. budget deficit hit $2.54 trillion for the first 10 months of this budget year. The deficit is on track to be second largest annual shortfall in U.S. history, behind only the most recent fiscal year that ended Sept. 30, 2020.
Keep An Eye On

  • U.S. Inflation Report. On October 13, the U.S. Bureau of Labor Statistics (BLS) releases its consumer price index (CPI) for September. Another below 0.4% gain for the month will be an optimistic reading on inflation giving the Fed room to delay tapering.  
  • U.S. Jobs Report. On October 8, the BLS releases its job numbers for September. Another weaker than expected reading (below 150,000) will push the Federal Reserve to delay their tapering of bond buying of mortgage-backed securities (currently $40 billion per month).     
  • Retail Sales. On October 15, the U.S. Census Bureau releases its retail sales estimate for September. Another reading similar to August’s very strong 0.7% gain will be very positive for continuing economic expansion.  
Ernest Goss, Ph.D. 
Email: [email protected]