NEW ALBANY — Local economists told an audience at IU Southeast on Tuesday that they remain optimistic about the economy for the state and the region.
Community members gathered for breakfast and to learn more about what they may expect from the national and local economy at the Indiana Business Outlook Panel.
Mark Frohlich, associate professor of Operations and Management at the IU Kelley School of Business, said 2018 was a good year for Indiana economically, and projections for 2019 show much of the same.
“2018 was a good year for us. You could even say a very good year,” he said. According to Frohlich, growth across the state beat last year’s predictions. Unemployment in Indiana is lower than its immediate neighbors and most similar manufacturing-heavy states he said, noting that the state is considered “at full employment right now.”
The year 2019 may be even better, with projected growth around 3.75 percent, Frohlich said.
“The first part of 2019 … we are probably going to have the best quarter. When we get into [quarters] two, three, four it will still remain relatively strong but we will still probably see a little bit of tapering off. There are however … black clouds that hang over not just our state, but the entire country,” he said.
One of those "black clouds" is the possibility of healthcare reform.
“I’ve seen in the manufacturing and some other sectors now companies going, in terms of keeping the workforce happy, to a zero deductible health insurance and a lot of other benefits trying to stay away from labor wage competition, but at a certain point there will probably be wage competition, too, as well as companies having to dig even deeper in to their pockets to finance healthcare as it is.”
Another "black cloud" is the opioid crisis, which by some estimates costs the state billions of dollars a year. The clear tragedy, Frohlich said, is those who are swept up in the epidemic and whose lives are forever altered. From an economic outlook, the drug crisis makes it harder for employers to find and keep workers.
“Relating it to manufacturing, it's estimated that half the manufacturers are having problems recruiting new hires or getting existing workers through random drug tests. It's estimated that a quarter in the state consider it a severe problem," Frohlich said.
Uric Dufrene, the executive vice chancellor of Academic Affairs at IU Southeast, brought the focus in to a micro level, looking just at Louisville metro and Southern Indiana.
According to Dufrene, there are job gains in the local markets, but they do not match what is happening at the national level.
“This year was very interesting for Louisville metro,” he said. According to Dufrene, while payroll growth at the national level has been between 1.5 and 1.75 percent, Louisville metro has stayed below 1 percent. The area’s job gains are heavily connected to growth in manufacturing, signaling a need to diversify, he said.
To prove his point, he turned to the numbers.
“Over past 12 months ... Indy had a total of 16,400 job postings in computer and mathematics, the IT area. Nashville [had] 18,900. Cincinnati [had] 20,000. And Louisville metro had 8,500.”
In Southern Indiana, recent trends of steady job growth have stalled.
“The growth engine for Southern Indiana has been Clark County ... a significant portion of Southern Indiana job growth occurred in Clark County and much of this growth we can attribute that to the mega commercial site of River Ridge,” Dufrene said. “For example, the fourth quarter of 2015 registered a net positive increase of payrolls over of $4,000. This is possibly the largest payroll growth or gain in Clark County history, at least the largest with data available.”
From the recession to roughly two years ago, Clark County had been responsible for 80 percent of all job growth across Southern Indiana. However, recent years have seen net job loss in the county.
“That impressive job growth has come to a complete standstill and is now moving in reverse,” Dufrene said.
In the first quarter of 2018, if you exclude Clark County, Southern Indiana netted just over 1,000 jobs, the majority coming from Floyd County, Dufrene said.