IBJNews

IU experts: Economy to stay 'lousy' in 2012

IBJ Staff
November 3, 2011
Back to TopCommentsE-mailPrintBookmark and Share

The Indiana and national economies in 2012 likely will experience a repeat of the slow growth seen this year, with unemployment remaining relatively high, according to a panel of Indiana University Kelley School of Business economists.

The experts, speaking Thursday morning at the Columbia Club in downtown Indianapolis, predicted the national economy will grow a modest 2.5 percent to 3 percent next year.

Indiana’s economy, meanwhile, could outpace the national average and grow 3.1 percent in 2012.

“I’ve been told to be concise,” Bill Witte, an associate professor emeritus of economics at IU, said. “The economy in 2011 has been lousy; the economy in 2012 will be lousy.”

The economists last year predicted growth in 2011 of 3 percent. Through the first nine months of the year, the economy has grown just 1.4 percent.

“Clearly we were too optimistic,” Witte said.

Any expansion should contribute to roughly 2 million new jobs, which would cause the national unemployment rate to decline to about 8.4 percent by the end of 2012, they said. That would beat the prediction of the Federal Reserve, which on Wednesday said it expected the jobless rate to be at 8.6 percent by the end of next year.

The nation’s unemployment rate in September stood at 9.1 percent.

Indiana’s rate is only slightly better, at 8.9 percent, and could drop to 8 percent within the next 12 months, according to the forecast. Further, Indiana shouldn’t expect to reach pre-recession employment numbers until 2014.

“We see continuing tepid economic recovery during 2012, with disappointing output expansion, low inflation, and a small decline in unemployment,” Witte said prior to Thursday' s event in a written statement. “This is better than a slide back into recession, but is a long way from an optimistic outlook.”

The IU economists predict that Indiana will add about 40,000 jobs next year as the economy gains steam toward the end of 2012. Strong growth is expected in the financial services, education and health, and professional and business sectors. Construction and government sectors will continue to be a drag on any recovery.

In addition, Hoosiers’ personal income could grow about 2 percent in 2012, they said.

Jerry Conover, director of the Indiana Business Research Center, said, “It’s been two years since the economy in Indiana has bottomed out and we’ve since been treading water."

Indiana lost 250,000 jobs during the recession, or almost 8 percent of its work force. The state since has gained 55,000 jobs, and another 40,000 jobs should be added in 2012, Conover predicted.

“We predicted the same thing last year and we didn’t come close to that,” Conover said

Other highlights from the forecast:

— Inflation will be slightly above 2 percent in 2012, with consumer spending rising moderately;

— The Federal Reserve will continue to maintain its near-zero position on short-term interest rates well into 2013, causing mortgage rates to remain at historically low levels;

— Energy prices will be relatively flat in 2012, with oil prices averaging about $90 per barrel;

— The federal budget deficit will remain high, and any congressional efforts to reduce it will have little immediate impact.

Indianapolis will host the Super Bowl in February and could get an economic boost from the game of between $100 million and $200 million.

“It’s a nice stimulus, but it will be relatively fleeting,” said Kyle Anderson, an assistant professor of economics at the Kelley School.




 

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. I am not by any means judging whether this is a good or bad project. It's pretty simple, the developers are not showing a hardship or need for this economic incentive. It is a vacant field, the easiest for development, and the developer already has the money to invest $26 million for construction. If they can afford that, they can afford to pay property taxes just like the rest of the residents do. As well, an average of $15/hour is an absolute joke in terms of economic development. Get in high paying jobs and maybe there's a different story. But that's the problem with this ask, it is speculative and users are just not known.

  2. Shouldn't this be a museum

  3. I don't have a problem with higher taxes, since it is obvious that our city is not adequately funded. And Ballard doesn't want to admit it, but he has increased taxes indirectly by 1) selling assets and spending the money, 2) letting now private entities increase user fees which were previously capped, 3) by spending reserves, and 4) by heavy dependence on TIFs. At the end, these are all indirect tax increases since someone will eventually have to pay for them. It's mathematics. You put property tax caps ("tax cut"), but you don't cut expenditures (justifiably so), so you increase taxes indirectly.

  4. Marijuana is the safest natural drug grown. Addiction is never physical. Marijuana health benefits are far more reaching then synthesized drugs. Abbott, Lilly, and the thousands of others create poisons and label them as medication. There is no current manufactured drug on the market that does not pose immediate and long term threat to the human anatomy. Certainly the potency of marijuana has increased by hybrids and growing techniques. However, Alcohol has been proven to destroy more families, relationships, cause more deaths and injuries in addition to the damage done to the body. Many confrontations such as domestic violence and other crimes can be attributed to alcohol. The criminal activities and injustices that surround marijuana exists because it is illegal in much of the world. If legalized throughout the world you would see a dramatic decrease in such activities and a savings to many countries for legal prosecutions, incarceration etc in regards to marijuana. It indeed can create wealth for the government by collecting taxes, creating jobs, etc.... I personally do not partake. I do hope it is legalized throughout the world.

  5. Build the resevoir. If built this will provide jobs and a reason to visit Anderson. The city needs to do something to differentiate itself from other cities in the area. Kudos to people with vision that are backing this project.

ADVERTISEMENT