Indiana economy is cooling off

July 22, 2010
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An Indiana University index that anticipates economic conditions in the state several months in the future lost steam in June for the second month in a row.

That suggests already-tepid growth will weaken even more. But looking at the bright side, at least the economy isn’t expected to slip into reverse.

The index, compiled by the Indiana Business Research Center in the Kelley School of Business, retreated to 96.3 in June, the lowest since February. The release can be read here.

Homebuilder enthusiasm cooled, stocks of transportation companies slipped and manufacturing activity retreated. But orders for cars and parts edged up. And the spread between yields on 10-year Treasury bonds minus the Federal Funds rate, a measure of investor expectations of a near-term recession, improved slightly, too.

June looked worse than May partly because the Memorial Day weekend falls in May, noted Timothy Slaper, who directs research at the center.

The index suggests recession won’t return. But it’s going to be a long time before very many more jobs are created.

If three of the five index components lose momentum in July, which would mark a third month in a row, Slaper will dig deeper into other statistics to try to anticipate whether another recession is on the way.

Nearly two years have passed since three of the five components declined three consecutive months.
 

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