NW Iowa bucks national recession trend
While gloom and doom are the rule for national economic prognosticators who say the nation’s economy is on a slippery slope toward a recession, that’s not the case for Iowa, and particularly northwest Iowa, which is breaking all the trends — and the rules.
In its February survey, the Creighton Economic Forecasting Group offered up its gauge of business conditions throughout the Midwest. The group uses an index between 0 and 100. A number over 50 predicts an expanding economy over the next three to six months.
While the confidence index for Mid-America Business Conditions overall dropped to 37.8 in January, Iowa’s Business Conditions Index rose to an average of 54.7. That number includes a score of 60 for new orders, 60.1 for production, and 53.3 for employment. The two areas under 50 points were 42.9 for delivery lead time and 46.4 for inventories.
Ironically, Iowa may be directly benefitting from the national economic slowdown. A weak dollar has helped spike food exports, cementing the state’s economic health.
Site Selection Magazine in its March issue chose Sioux City as the nation’s top metro area with a population less than 200,000 as the best place to start a business.
What really put Sioux City over the top was an announcement by Hyperion Energy Center that it is seriously considering neighboring Union County, South Dakota as the location for its $10-billion oil refinery. It would be the second-largest capital investment in U.S. history. Dallas-based Hyperion Resources in December filed an application to rezone 3,882 acres from agricultural to a proposed Energy Center Planned Development District.
Hyperion officials cite 4,500 construction jobs and 1,800 permanent jobs resulting from the plant with a $13.7 billion impact on the local economy.
Hyperion would pay between $20 and $30 an hour. The plant, about eight miles east of Vermillion, S.D., would be the first built in the U.S. in more than 30 years and would refine 400,000 barrels of Canadian crude per day into gasoline and diesel.
Another reason for naming the Sioux City metro area as the top candidate was a $400-million expansion announced by Beef Products International for its South Sioux City plant.
One big beneficiary of the Hyperion refinery would be the Jefferson-Elk Point School District. The school of approximately 700 students total in grades K-12 will get $20.4 million annually in additional property taxes from the refinery. (Did anyone say teacher raises?)
While Estherville has survived the housing crash that has hit elsewhere in the country, the talk of a housing slump nationally has made people more conservative in general, according to Edith Clarken of Clarken Auction and Real Estate.
“It’s just not that bad here,” Clarken said. She noted that negative talk about the national economy “doesn’t do anybody any good” where the economy is faring better.
While February traditionally is a slump in the real estate market, Clarken said the spring market looks extremely brisk.
“We are just stacked,” Clarken said. “April looks absolutely wonderful.”
Clarken agreed that the national economy though could be on the skids. On a flight to and from Paris last month she couldn’t help but notice that the plane was at half capacity. She attributed much of that to the fact that the exchange rate was 1.4 Euros to the dollar.
On the bright side, that means more foreign visitors coming to the U.S.
“I’m sure they’re coming here,” Clarken said. “America is on sale.”
“We’ve been as busy in January and February as we were in the middle of the summer last year,” said Nancy Petersen at Petersen Real Estate. “I think things are going really fine here. I think we are very blessed to live in a part of the country that’s still affordable. it’s the one place in America where the American dream of home ownership can come true.”
While homes are still affordable in Estherville, homes are also maintaining their value, unlike other parts of the country where housing values have plummeted 40 percent or more.
“There’s a greater demand for houses than we have houses available,” Petersen said. “People know this is a great place to go. I feel very optimistic about a very good year for 2008.”
Al Blum, chairman of the Estherville Industrial Development Corporation, said Estherville is poised for growth given the state’s role in the renewable energy industry.
“I wouldn’t want to live anywhere else than northwest Iowa right now,” Blum said.
Blum said ethanol, biodiesel, and wind energy, and their associated industries, are driving the economy.
“It’s an energy-driven economy that we have and we have all the energy here,” Blum said.
Blum said economists across the board figure for a five- to 10-year economic surge for Iowa as it places its bets on renewable energy.
Blum also sees a strong upside for the real estate sector locally.
“There just is a market for housing that’s better than anywhere else in the country,” Blum said.