The Quad Cities continued to record slightly lower inflation than the national average as its gross domestic product (GDP) grew by 2.1% in the second quarter, fueling cautious optimism for the future. That’s according to the recently released Quad Cities Chambers’ Q2 Market Report and summary by Bill Polley, director of business intelligence for the […]
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The Quad Cities continued to record slightly lower inflation than the national average as its gross domestic product (GDP) grew by 2.1% in the second quarter, fueling cautious optimism for the future.That’s according to the recently released Quad Cities Chambers’ Q2 Market Report and summary by Bill Polley, director of business intelligence for the chamber. It also suggests the six-county, bi-state region is in a good position to ride out future challenges as economists’ concerns over a recession continue to cool.Bill PolleyMr. Polley’s economic analysis of the Q2 report’s findings suggests that the Quad Cities 2.1% GDP growth, while slightly lower than long-term trends, still is “consistent with an economy that continues to recover from supply disruptions and adjust to rising interest rates.”The bistate region’s labor market also remains resilient while interest rates have risen, the report said. And though unemployment is rising slowly, it still is well below average and the rate is “nowhere near recession levels.” Job growth in the QC also remains positive and is approaching pre-pandemic levels, according to Mr. Polley, who joined the chamber in January 2023 after years of teaching and doing economic research at Western Illinois University. He added “This has put some upward pressure on some wages, especially in counties with lower unemployment rates, though most wages remain competitive compared to national averages.”Mr. Polley also points to economic forecasts that suggest continued improvement could be on the horizon since the Federal Reserve’s aggressive interest rate increases have significantly reduced inflation from a peak of 9.1% annually in mid-2022 to 3% percent at the end of Q2.
Soft landing ahead?
That may suggest a “‘soft landing’ in which inflation returns to its desired level without a recession is still a possibility, though not assured,” Mr. Polley said. “Both Iowa and Illinois are performing better economically than the national average according to a closely watched state-level index,” he added.The labor market also continues to be resilient despite those interest rate increases, and even though unemployment rose slightly, it remains below average and nowhere near recession levels. “Locally, job growth remains positive and approaching pre-pandemic levels,” his summary said. “This has put some upward pressure on some wages, especially in counties with lower unemployment rates, though most wages remain competitive compared to national averages.”Overall, Mr. Polley writes, “We conclude by noting that the Quad Cities region is currently well-positioned to ride out the remaining uncertainty as we look for confirmation of a soft landing.”Other highlights in the 2023 Q2 chamber report and summary include:
The QC added 2,600 jobs from June 2022 to June 2023, according to Bureau of Labor Statistics figures. And total nonfarm jobs in the region stood at 186,600 at the end of Q2.
The unemployment rate for the QC metropolitan statistical area was 4.4% at the close of Q2, up from 3.5% in April. Those totals suggest a continued tight labor market and more competition for employees which also can drive higher wages.
Scott County remains a QC labor market high spot, according to a recent blog post by Mr. Polley. Wages there rose 10.4% in the first quarter of 2023, 36th highest out of the nation’s 361 most populous counties.
Wages in the Midwest remain competitive and benefits remain below the national average for most occupations. That is true in the QC, where earnings for heavy and tractor-trailer truck drivers and machinists are comparable to the national average while wages for most other occupations are below the national average.
Predicted stronger than expected economic growth “could keep the pressure on wages unless the Federal Reserve can bring inflation back into the 2- 3% range.”
What lies ahead?
Looking ahead, Mr. Polley said, “There is reason to be cautiously optimistic.”His report pointed to a forecasting model that estimated a third-quarter real GDP growth rate of 4.9%. “This would be remarkable if it turns out to be true,” Mr. Polley wrote. Estimates have since been trending down, he said, with some forecasts suggesting 3%. “Even if they meet in the middle (around 4%), that would be welcome news,” he concluded.Such “robust growth” could, however, come at cost, if it prompts the Fed to keep raising interest rates higher longer. If that happens, it could negatively impact manufacturers in the Midwest and Quad Cities. For that sector, the challenges of potentially higher interest rates combined with continuing economic weakness in China bear watching in the days and months ahead.“For now though, other sectors of the economy are taking up the slack,” Mr. Polley said.Looking ahead, he suggested the “nascent field of artificial intelligence (AI) has the potential to add to productivity growth over the next decade, much like the Internet did in the ‘90s. As with the Internet, the productivity growth may not be as dramatic or as quickly realized as some envision, but like the Internet, it could revolutionize many business processes behind the scenes and lead to unexpected types of productivity enhancements. Recent advances in AI have spurred the semiconductor industry out of its slump and bode well for the future.”
QC projects, expansions
Once again, the chamber market report also highlighted its ongoing efforts to attract and expand development and jobs in the Quad Cities. The report included this pair of Quad Cities Q2 additions:
Atlas Roofing announced plans for a manufacturing plant in Clinton, Iowa. With a capital investment of $207 million, this project is expected to generate a total annual economic impact of over $63 million and 150 new jobs.
CP Supply, a division of Yard Sign Ninjas, expanded by buying and installing a large, first-of-its-kind in the U.S. printing machine and expanding its facility in Bettendorf. It will serve as the company’s flagship as it hosts clients from all over the world to demonstrate this unique manufacturing process. With a capital investment of $3.45 million it is expected to generate a total annual impact of nearly $2.5 million and 10 new jobs.
The chamber report also said it finished the 2022 fiscal year with 79 projects compared to 72 in fiscal year 2022. It also hosted six site visits in fiscal year 2202 and in Q2 it received 20 requests for information and completed nine.
