Iowa companies show “robust” rise in optimism about economy for 2023 | Oil wine daily register

According to an Iowa business organization’s quarterly survey, the outlook for Iowa businesses is optimistic due to a 2022 tax cut package, diverse industries and other factors.

The Iowa Business Council’s (IBC) second-quarter economic outlook survey shows “strong confidence” in Iowa’s economy, with the index rising since the first quarter. The survey, conducted quarterly among 21 CEOs from some of Iowa’s largest companies, found a surge in optimism for the coming six months.

The Index is a weighted average calculated using a formula based on employer responses to survey questions on spending, revenue and employment. According to Joe Murphy, President of the IBC, there has been a sharp rise in all three metrics.

“This is the first report we have seen in the last three years that all of our metrics are above the 60 point threshold. While anything over 50 represents positive economic growth, the fact that we’d been down quite a bit since the third or fourth quarter of 2021 started to cause us some concern at IBC,” Murphy said. “We’ve had some minor upsides over the past two quarters, but a significant uptick in our optimism really bodes well for Iowa as we wrap up our fiscal year and head into the second half of this calendar year.”

tax legislation

Murphy said some of the optimism is due to the tax changes the Iowa Legislature passed in 2022 and put into effect in January.

“I would say that the past few years in particular have been very positive for the business,” Murphy said. “We have implemented many important human resource development policies and realigned our human resource development initiatives here at the state level. The most important thing, in my opinion, is to look at the tax reform packages that were passed in 2022. This not only makes us very optimistic in the short term, but also in the long term.”

The state is only six months into its five-year rollout of tax changes, and the IBC expects growth beyond the next six months as measured by the survey.

Recent tax changes affect both individual income tax rates and corporate tax rates.

“All other things being equal, I expect continued optimism, continued business expansion and, as a result, a further increase in Iowa’s ability to expand,” said Murphy.

employment

Employment optimism rose the most among the three indicators. However, most of the employers surveyed still consider this to be their biggest problem.

The survey shows that 80% of respondents said it was “somewhat to very difficult” to hire, down 14% from the previous quarter. Ninety percent of executives surveyed said attracting and retaining employees is their number one concern.

“We are still in the midst of a workforce situation where we need to attract and retain a skilled workforce in our state,” Murphy said.

Murphy said that because of the low unemployment rate, the biggest challenge for Iowa businesses will be finding people to fill vacancies.

In May, Iowa reported an unemployment rate of 2.7%, a full percentage point below the state average.

The IBC works with K-12 schools to make students aware of Business Education Alliance job opportunities. The IBC also markets outside of Iowa to attract employees into the state to retain and expand the Iowa workforce.

A diverse economy

Murphy believes that a diverse range of industries helps Iowa buck trends in other states.

“We are truly blessed with a diverse economy. Manufacturing is our most important industry in our state, but we are also very well represented in financial services, biotechnology and agriculture. We don’t have just one industry that keeps us going. ‘ Murphy said. “It depends on many factors. If one area is perhaps not doing so well, other areas can make up the gap.”

According to Murphy, diverse industries are keeping Iowa competitive nationally despite nationwide concerns about an impending economic downturn.

“The [a diverse economy] That’s what’s traditionally really helped Iowa beat expectations when you look at previous recessions, particularly 2008-2009. Iowa has always weathered some of these trying times better than any other state in the country, and this time is no different. While other states are experiencing prolonged downturns, Iowa has not experienced any downturn at all.”

Phil Jasper, President of Mission Systems at Collins Aerospace and Chair of the Iowa Business Council, also expressed confidence that Iowa businesses will outperform national projections.

“IBC members remain confident in Iowa’s economy,” Jasper said in a press release. “Despite the narrative of an imminent economic downturn, here in Iowa, Iowa’s business leaders are optimistic about the future.”