Fed rate hikes fail to slow regional inflation index

Monday, May 1st 2000, 12:00 am

By: News On 6

OMAHA, Neb. (AP) -- The regional economy continues its strong expansion as five Federal Reserve rate hikes have done little to lower the regional inflation index, according to a new busines ssurvey released Sunday.

The April index for the Mid-America Business Conditions survey, was 61.5, only slightly lower than March's 61.6.

The prices paid index, which marks inflation, remained high at 81.3 in April, compared with March's 82.4.

The survey includes Arkansas, Iowa, Kansas, Minnesota, Missouri, Nebraska, North Dakota, Oklahoma and South Dakota.

Creighton University economics professor Ernie Goss conducts the monthly survey of industrial purchasing managers. The index ranges from 0 to 100, with numbers greater than 50 indicating the economy is expanding. Numbers under 42 predict a shrinking economy.

"Eventually it will slow," Goss said.

"The real danger is the Fed may overshoot and slow the economy too much," he said.

Goss said the Fed will probably raise interest rates .5 percent at its May 16 meeting, or .25 percent at the May meeting and again on June 27.

Survey participants reported higher energy prices are contributing to the higher prices they are paying for raw materials and supplies, Goss said.

The regional export reading declined to 49.7 in spite of improving global economic conditions. Goss said that makes Mid-American products expensive for people in other countries, especially Japan.

"Japan is a real important trading partner to this part of the country," Goss said.

"Japan just hasn't grown the way we thought it would," he said.