As always the key is the bottom of the cash-flow pyramid, prices realized at the farm gate for commodities and crops on which everything else, up to and including land prices are just a leveraged bet.
From Creighton University's Heider College of Business, April 1:
March survey highlights:
- The Business Conditions Index plummeted below growth neutral for the month.
- Almost two-thirds of supply managers reported that the coronavirus produced shipping problems to and from vendors.
- Employment index fell to its lowest level in 10 years.
- Business confidence plunged to a record low.
- More than half, or 54.3% indicated that the virus had increased worker absences for the month.
- More than one-third, or 34.2%, of manufacturers switched to a domestic vendor.
OMAHA, Neb. (April 1, 2020) – The March Creighton University Mid-America Business Conditions Index, a leading economic indicator for the nine-state region stretching from Minnesota to Arkansas, plummeted for the month reaching its lowest level since September 2016.Overall index: After advancing above growth neutral 50.0 for three straight months, the Business Conditions Index, which ranges between 0 and 100, tumbled to 46.7 from February’s 52.8.“According to Creighton’s March survey of regional manufacturing supply managers, covid-19 had a smaller impact on the manufacturing sector than other areas of the economy more directly tied to the consumer. I expect negative impacts for manufacturers to worsen in the next month since almost two-thirds of supply managers reported that the coronavirus produced shipping problems to and from vendors," said Ernie Goss, PhD, director of Creighton University’s Economic Forecasting Group and the Jack A. MacAllister Chair in Regional Economics in the Heider College of Business.Additionally, Goss said, “Creighton’s March survey showed that eight of 10 supply managers reported that the coronavirus had caused the cancellation of business meetings, and 54.3% indicated that the virus had produced worker absences for the month.”Several supply managers reported that the coronavirus had produced shipping delays which resulted in inventory depletions.Employment: The March employment index slumped to 34.7 from February’s already weak 46.4. One supply manager reported, “Recently, I laid off 10% of workforce in anticipation of further downturns.”
“Last Thursday, the U.S. Department of Labor reported the number of initial claims for unemployment insurance for the nine-state region rose to 272,540 from 16,628 the week before. This represents more than a 16-fold increase in initial claims compared to a lower 11-fold increase for the rest of the nation,” said Goss.Wholesale Prices: The wholesale inflation gauge for the month indicated only modest wholesale inflationary pressures with a wholesale price index of 55.2, down from 61.3 in February.Confidence: Looking ahead six months, economic optimism, as captured by the March Business Confidence Index, plunged to a record low 14.5 from February’s 51.4 and January’s 58.8.Said one supply manager, “My answers (responses) are just a snapshot in time and might change tomorrow.”...
....MUCH MORE
