Economic growth in the Indianapolis area next year is expected to slightly outpace statewide growth, but both the metro area and the state will grow more slowly than the 2% growth forecast nationwide, according to an economic forecast released Thursday by Indiana University’s Kelley School of Business.
The forecasters say they expect economic output next year to grow about 1.25 percent statewide and between 1.5% and 2% in the Indianapolis-Carmel-Anderson metro area. But they also acknowledge that actual performance might be weaker.
“Indianapolis continues to draw in talent and investment that should help it exceed the overall state level of growth,” Clinical Assistant Professor of Business Economics Kyle Anderson said in a written statement. “However, there is risk that weakness in the broader economy, and especially weakness in manufacturing, could make this forecast too optimistic.”
U.S. economic growth is expected to slow in 2020 because political dysfunction and international trade conflicts have hurt consumer and business confidence over the past year, the economists said.
Indiana’s growth is expected to lag the national average because of the state’s tight labor market and its manufacturing-heavy economy, the economists said. In times of a slowdown, manufacturing contracts more quickly than other industries.
More than 17 percent of Indiana’s jobs are in manufacturing—the highest percentage nationwide. Manufacturing output makes up nearly 28 percent of Indiana’s gross state product.
Other forecast predictions:
— National and state unemployment rates will hold steady, and Indiana will stay at or below full employment through next year.
— Energy prices will be relatively stable, with prices similar to this year’s.
— Business investment will improve slightly but remain weak.
The Kelley School presented its forecast Thursday at IUPUI. Indianapolis is the first of eight cities in which the school will share its findings this month, along with New Albany, Columbus, Richmond, South Bend, Schererville, Anderson and Kokomo.
A detailed report on the IU forecast will be published online in December in the Indiana Business Review, a publication of the Kelley School’s Indiana Business Research Center.