In Iowa, we are seeing large layoffs affecting consumer confidence negatively. Due to higher energy prices and high levels of consumer debt, consumers will reduce their level of retail purchases somewhat. Likewise, higher short term interest rates are restraining retail sales somewhat. Two factors account for this decline. First very low levels of unemployment and low rates of in-migration.
Immigration is now an important factor in fueling job growth in the region.
The Business Services industry will continue to grow at a fairly healthy pact. Likewise, food processing will remain fairly, strong but certainly not exceptionally so. High energy prices will also reduce farm income and reduce profit rates for many firms as they are unable to pass along higher input prices in the form of higher prices. Overall inflation will rise somewhat over the next six months but decline after the six month period. The rise in inflation will be driven more by higher energy prices than by higher labor costs.