Economic growth will remain sluggish into next year as companies remain hesitant to add jobs, Indiana University economists said Thursday morning during their annual forecast.
“The past year has been one of disappointingly weak recovery, and sadly, we expect that 2011 will bring more of the same,” said Bill Witte, an associate professor of economics at IU.
The private sector lost more than 7 million jobs during the recession, which many economists say ended in June 2009. The number of unemployed has continued to grow since, Witte said.
Nationally, the unemployment rate in September was 9.6 percent, lower than Indiana’s rate of 10.1 percent.
Still, Jerry Conover, director of IU’s Business Research Center, expects Indiana to add jobs next year. The Hoosier state ranks fifth nationally in terms of job growth in 2010 and has regained about 18 percent of the jobs it lost. Most of the gains have been in private education and health care services, as well as in public-sector employment.
“Employment will continue to grow,” Witte said. “Even so, you won’t have enough growth to make a lot of progress against unemployment.
Payroll growth next year will remain at about its current 2 percent level, which would translate to about 50,000 new jobs, Conover said. But state unemployment likely will remain above 9 percent for most of 2011, he predicted.
“The increase is from a very weak base level,” he said. “We probably won’t hit pre-recession peak employment until 2013 or beyond.”
In Indianapolis, job growth in 2011 could be slightly better, between 2 percent and 3 percent, but still significantly below pre-recession levels, the panel predicted at its forecast held at the downtown Columbia Club.
Overall, the panel said the national economy will grow next year at a rate of about 3 percent.
“This will be a little better than 2010, but not enough to make much progress against the damage done during the recession,” Witte said.
Other highlights from the forecast:
— Hoosiers’ personal incomes will rise moderately, at a pace of about 3.5 percent.
— Inflation will be low, below 1 percent, as consumer spending rises very slowly.
— Residential construction will continue to struggle, preventing any significant housing rebound.
— Mortgage rates will remain low, though some rise from this year’s “bargain-basement” levels is likely.
— Energy prices are expected to rise moderately, but oil prices will stay below $80 a barrel.
— State and local budgets will remain strained by slow revenue growth, the disappearance of federal stimulus funds and weakened property values.
“All in all, it’s not a bad forecast,” Conover said, “but we’re not in the land of milk and honey yet.”