Weekly Economic Trends and Indicators

This week, we examine recent trends in economic activity in some key sectors of the Quad Cities economy. Specifically, we are looking at 2021 regional gross domestic product (GDP) disaggregated at the level of two-digit North American Industry Classification System (NAICS) codes from the Bureau of Economic Analysis.

Tracking local economic performance has been a challenge since the beginning of the COVID-19 pandemic. At the time the pandemic hit, the latest local data was 2018, which was no longer very relevant in an environment that had been so radically changed.

Now that we have 2021 data we can see how well the Quad Cities economy bounced back from the COVID-19 recession. Based on anecdotal evidence that 2022 and early 2023 continued at a slightly slower pace compared to 2021, this data gives us a good picture of the recovery immediately after the recession and a rough idea of what to expect in more recent data.

As the table below shows, the news for the Quad Cities is quite positive. The table focuses on three broad industry classifications: construction, manufacturing and logistics (transportation and warehousing). Taken together, these industries comprise more than one-quarter of the Quad Cities economy. The impact of COVID-19 is apparent in 2020, however note the strong recovery in 2021. In each of these industries, the rebound in 2021 more than made up for the previous year’s declines.

Averaging the numbers from 2020 and 2021 (far right column) also compares well to previous growth rates. A couple of observations are worth pointing out. First, note that manufacturing of nondurables (which includes food processing) did not decline during the pandemic. Because people need to eat in bad times as well as good times, the food and beverage industry can be an important stabilizing factor for the local economy during times of recession.

Second, we do not know the growth for logistics in 2020 and 2021 because 2020 data could not be released for confidentiality reasons (due to a small number of dominant firms). We do, however, know the two year growth rate from 2019 to 2021 was positive and close to the pre-pandemic average.

The rebound from 2020 was dramatic. By 2022, the pace of growth slowed somewhat as the Federal Reserve began to raise interest rates to fight inflation. Even so, most indicators (including those we have chronicled here in recent weeks) continue to point to growth in the local economy. From 2017 to 2021, the QC economy as a whole grew at about a 3.7% annual rate (in current dollars), which is still positive even after adjusting for inflation.

Next week: Recent trends in energy prices