Business Record Daily AM 5.15.20

Moody’s lists Des Moines as region likely to recover quickly, but local leaders urge caution and warn of long recovery ahead

By Michael Crumb | Senior Staff Writer

Des Moines is among the areas of the country most capable of recovering quickly from the economic crash caused by the coronavirus pandemic, according to an analysis done by the credit rating and research company Moody’s.

The analysis, reported by Yahoo Finance on May 9, examined the top 100 metro areas in the U.S. The metros poised to recover quickly based on the analysis included San Jose, Calif.; Durham, N.C.; Austin, Texas; Seattle; and Minneapolis. It also included Des Moines and Omaha.

"The most dynamic recoveries may well bypass traditional powerhouses and take place instead in areas that [weren’t] poised to lead the way in 2020 before everything changed," Adam Kamins, senior regional economist at Moody’s Analytics, wrote in the Yahoo Finance story.

Kamins wrote that the twin factors of low population density and educational attainment were going to boost these metro areas.

"A key difference between this recovery and the last recovery is the population density," he said. "It's going to have a different effect this time than it did last time."

While there is optimism by local leaders and experts that Des Moines is positioned to recover faster than some other communities across the country, they urge caution, saying it will likely be a long slog until the economy returns to anything close to pre-COVID-19 levels.

Dave Swenson, economics professor at Iowa State University, said the analysis is "hinged on the supposition that … medium-density communities with relatively high college degree requirements are more likely to recover more rapidly from this crisis."

"The point of it really rests on the fact that population density … in and of itself is going to become, at least in the near term, a strong determinant of economic vitality, and of course that remains to be seen," Swenson said.

He said the cities identified in the analysis are cities one would think of as areas that would recover more quickly than other areas because they have less density and a workforce with higher education attainment.

"They are cities that have shown relatively strong growth throughout the past 10 years, of course the recovery of the Great Recession," Swenson said. "They all stand out. If you would have asked me, 'Who do you think is going to recover the most rapidly?' I would have immediately said Des Moines, and then Omaha."

He said while Des Moines’ leisure and retail industries have been hit hard, they each contribute just 3% to the metro area’s GDP. By comparison, the finance and insurance industries have fared well and contribute one-third of the GDP.

"[And] that right there is a foundation for resilience because of its lower dependence on its GDP from some of these smaller sectors," Swenson said.

He said the analysis, which came just days before Des Moines was identified as one of the national hot spots for COVID-19, looks beyond the current situation.

"It is really driven by the assumption that density is really going to matter in the future, that an absence of density can create economic activity that more dense areas can’t sustain," he said.
Swenson said that people should prepare for a long recovery, and that the phased reopening that has begun in Iowa isn’t going to suddenly jump-start the economy.

"Reasonably good estimates by the Congressional Budget Office and other kinds of modelers see us, even at the end of next year, not having recovered to the level of output that we had prior to this collapse in our economy," Swenson said. "So, I’m really thinking in terms of an 18-month recovery to just claw our way back to a beginning point."

Another factor in recovery will be the change in relationship between business relationships and structures, and in the relationship between consumer and service provider, Swenson said.

"There's a lot of things we're going to learn, but the one thing we're not going to do, we’re not going to reclaim this year anything like what we had last year," Swenson said.

Continue reading on www.businessrecord.com/coronarivus.

MEMBERSHIP EXCLUSIVE CONTENT

Iowa universities confront COVID-19

By Kate Hayden | Staff Writer

How has the COVID-19 pandemic changed research happening at Iowa universities? The Business Record reached out to the three regent universities to see how faculty and administrators are adjusting for priority research; plus, a senior student’s perspective as he finishes his year at Drake University.

What does it take to keep research teams safe? (Insider)
University: University of Iowa
Who: Marty Scholtz, vice president of research
When Marty Scholtz thought about the University of Iowa’s research community rising to a challenge, he recalled the floods of 2008. "It was a monumental event on campus and shut down a lot of buildings and access. We had to pivot how we ran as a campus," said Scholtz, vice president of research at UI. The outbreak of the COVID-19 coronavirus in Iowa mid-March is forcing the university to pivot yet again.

Teaching public health in times of crisis (Insider)
University: University of Northern Iowa
Who: Disa Cornish, associate professor of public health and education
In the University of Northern Iowa’s Health, Recreation and Community Services Department, Disa Cornish and her colleagues are training the next generation of public health advocates in Iowa -- a generation that is witnessing firsthand a larger-than-life fight against COVID-19. Cornish shared with the Business Record how an ongoing pandemic influences teaching public health students.

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University: Iowa State University
Who: Hridesh Rajan, interim chair of the Department of Computer Science and Kingland Professor of Data Science
Team members: Yijia Huang, Rangeet Pan, Jianqiang Zhang and Tomislav Jelesijevic, ISU; Robert Dyer, Bowling Green University; and Simon Galetta, Des Moines University.
Status: Project ongoing
After the White House called on researchers nationally to assist in COVID-19, Hridesh Rajan realized that the large body of published papers on coronaviruses and other epidemiology studies could offer "game-changing insights" for medical researchers -- but first, those researchers spend hours trying to find the right papers. Existing databases for published papers indexed keywords found throughout the papers, so one piece of published research with the term "coronavirus" written in passing during the introduction would be surfaced no matter how relevant the actual research is.

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University: Drake University
Who: Xavier Lechleitner, senior, major in entrepreneurial management and marketing
Xavier Lechleitner is finishing his senior year of college at Drake University at home in Edgar, Wis., on his family’s cattle farm. When Lechleitner’s operations management class asked students to submit a video blog exploring the pandemic’s reach, Lechleitner focused close to home.

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NEWS BRIEFS

Meredith reports third-quarter loss, takes steps to bolster liquidity
Meredith Corp. on Thursday reported a third-quarter loss of $289 million, due primarily to noncash impairments of goodwill and intangible assets of $296 million, as revenues declined by 6% from the year-ago quarter to $702 million. "Our performance for the fiscal 2020 third quarter was largely in-line with our expectations until mid-March when the outbreak of COVID-19 created an extremely challenging advertising environment," Meredith President and CEO Tom Harty said in an earnings release. "In response, we took a series of proactive steps to strengthen our liquidity and enhance our financial flexibility in the near-term to effectively navigate the current environment." The company took steps to maximize its free cash flow, ensure ample liquidity and heighten its financial flexibility. Those steps included pausing its common stock dividend and reducing pay for its board of directors, executives and other employees who in total make up 60% of its workforce. The company also significantly reduced capital expenditures and is working with customers and suppliers to optimize working capital. Among several encouraging trends are "robust traffic to our digital properties, strong upticks in our ecommerce activities, increased viewership to our local newscasts, and solid subscription metrics," Harty said. "We remain confident in the strength and resilience of the diversified business model we have built."

Strategic America wins international awards for four local marketing campaigns
West Des Moines-based marketing firm Strategic America was recently recognized with four Hermes Creative Awards. The international competition draws thousands of entries from around the world each year in a variety of categories. Strategic America was recognized for client work in pro bono and integrated marketing. The agency won a Platinum award, the highest honor, for the "See Yourself Hungry" campaign for Food Bank of Iowa. The pro bono campaign used a video and banner ads to show viewers just how close food insecurity can be. The agency also collected top honors for two integrated marketing campaigns. "The Money is Real" campaign for the Iowa Finance Authority highlighted resources that first-time homebuyers can get from the state. The second was for Catch Des Moines’ "The Ss are Silent" campaign highlighting the amazing things happening in the Greater Des Moines community. Strategic America also received a Gold award for its work with Dorothy’s House, a home and safe space for survivors of sex trafficking. "Reclaim. Renew. Restore." was part of a fundraising campaign to help fund a new home for survivors most in need.

City of Ankeny extends closures and cancellations
The city of Ankeny is extending closures and announcing new cancellations due to the COVID-19 pandemic, cancelling all events and programming at public facilities until May 27, the city announced this week. The Ankeny Kirkendall Public Library remains closed but is offering curbside service. More information on specific services and events is available online.

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The consequences of early reopening won’t appear for weeks, disease expert says
Iowa Capital Dispatch: Iowa is reopening too early, but the public won’t see the consequences until weeks from now because of COVID-19’s incubation period, warns an infectious disease doctor. Gov. Kim Reynolds announced she is lifting restrictions across the state starting today, allowing Iowans in all 99 counties to go out to eat, work out at the gym or get a massage. But a lack of widespread testing and contact tracing means the state is opening without reliable data to determine the spread of COVID-19 and if rates are declining, said Megan Srinivas, an infectious disease physician in Fort Dodge.

America's retail sales completely collapsed in April
CNN Business: America's retail sales collapsed to a historic low last month, underscoring just how badly retailers are struggling during the coronavirus crisis. An advance reading from the Census Bureau showed US retail sales plummeted by 16.4% in April, the largest since this data series began in 1992. It's also significantly higher than the revised 8.3% sales drop in March. Particularly weak were sales at clothing and accessories stores, which were down a whopping 89.3% in April.

ONE GOOD READ
Who’s on the hook for skipped mortgage payments?

BY EMILY BARSKE: Through early May, the Mortgage Bankers Association estimates that almost 4 million U.S. borrowers — nearly 8% of residential mortgages in a weekly survey — are in forbearance, meaning that they still owe the payments eventually but can skip them for now without penalty, Telis Demos of the Wall Street Journal reports. It’s too soon to tell whether this flexibility will ultimately achieve its intended purpose of avoiding a wave of defaults by helping borrowers muddle through hard times. In the meantime, though, investors still need to grapple with what millions of missed payments mean for the wide range of banks and specialized financial firms in the mortgage business.

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