Farm income boosts economy in Midwest

OMAHA, Neb. — The economic outlook for the Midwest and Plains region improved in March as farm income remained strong and the region experienced fewer problems in the housing market than the rest of the nation, according to a report released Tuesday.

The monthly survey of supply managers and business leaders in nine states showed the overall economic index climbing to 54.3 in March from February's 49.5 and January's 50.6.

Any score greater than 50 on the index, which ranges between 0 and 100, indicates an expanding economy over the next three to six months.

Creighton University economics professor Ernie Goss said two key factors helped the region's economy.

"First, there is less fallout from the downturn in the housing market, and second, there is record farm income stemming from very high agricultural commodity prices," Goss said.

And the region has benefited from the ethanol industry's strong presence in the area, which includes Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.

The region's employment index also improved in March, to 52.4. That's up from February's 48.9 and January's 46.8.

But Goss said the high crop prices have helped push the survey's measure of inflation to the highest level since the it began in 1994. That raw materials and supplies index jumped to 90.3 in March from February's 88.8 and January's 79.9.

And the supply managers still weren't optimistic, citing the economic problems the nation faces, Goss said. The confidence index rose slightly, to 38 in March from February's 37.8, but it remained extremely weak.

Goss said exports helped the region's economy last month as the decline in the value of the dollar made U.S. goods more affordable abroad. The export orders index climbed to 57.5 in March from February's 56.3.

But the import index also grew in March to 57.9 from February's 52.1.

For the second time in three months, Missouri's overall index dropped under growth neutral. It fell to 47.8 in March, compared with 55.3 in February and 49.3 in January. Components of the overall index: new orders at 50.4, production at 48.2, delivery lead time at 45.3, inventories at 44.2 and employment at 47.2.