INDIANAPOLIS — The state and national economies are poised for their best periods of recovery since the 2008 recession, according to a group of Indiana University economists.
But economists who express “apprehensive optimism” about 2015 also point out a couple of caveats — including the potential for national politics to tank the recovery and the recognition that some pockets of Indiana will continue to lag behind more prosperous Indianapolis.
Bill Witte, an economics professor at the Indiana University Kelley School of Business, kicked off the school’s annual “Business Outlook” state tour on Thursday with a list of “clear signs” of national economic growth. Those include stronger job growth, a stable housing market and an uptick in consumer spending. He and other panelists predicted those trends will continue.
But Witte also issued a warning: “This favorable outcome is far from a sure bet. The level of uncertainty in the current environment is high.”
The GOP’s takeover of the Senate on Tuesday doesn’t calm fears that President Obama and congressional Republicans will resume their duels over budget deficits and the debt ceiling — fights that have led to government shutdowns in the past, said Witte.
That could put the country back in the rut of what he called the “zombie growth” of 2012 when businesses were reluctant to invest and hire.
On a more optimistic note, Tim Slaper, research director at IU’s Indiana Business Research Center, predicted Indiana’s unemployment rate could fall below 5.25 percent as the state slowly adds jobs. Slaper sees a return to the same level of peak employment in Indiana from last decade.
Last year, Indiana gained about 52,000 jobs. By September of this year, the number of new jobs had already hit the 52,000 mark. Slaper sees that pace continuing, with employment in construction and transportation equipment manufacturing increasing by double digits.
Much of the panel’s rosy news focused on central Indiana, and nine counties that include and surround Indianapolis. Kyle Anderson, who teaches business economics at IU, said the metro area will add 40,000 new jobs by the end of this year. He noted the skyrocketing number of housing permits in two of the most affluent central Indiana counties — Boone and Hamilton.
He wasn’t as sunny about the rest of the state. He noted that income inequality — the gap between the rich and the poor — is more pronounced in rural areas where workers lack the skills and education needed to boost their earning potential.
Slaper echoed that concern, saying Indiana’s dependence on manufacturing both helps and hurts.
Fifteen percent of the state's income came from manufacturing wages, benefits and profits last year. But all those manufacturing jobs haven’t translated into more prosperity, he said.
Indiana ranks 38th in the nation in per capita income — at $38,812 in 2013 compared to $44,543 for the country overall.
“We’re not going to keep moving up the personal income ladder until we get a better balance of occupations and industries in the state,” Slaper said.