Special to the Recorder
MUNCIE, Ind. – A Ball State University economist is forecasting that Indiana’s economy will grow at a painfully slow, but steady rate in 2011 with unemployment falling throughout the year to a low of about 8.7 percent, more than a full percentage point lower than it was in October 2010.
Michael Hicks, director of Ball State’s Center for Business Research, believes the state will continue to be a national leader in job creation as the U.S. rebounds from the deep recession of 2007-2009.
“As bad as it has been, Indiana has done remarkably well over the recession. Given the large manufacturing share of our economy, we probably should have had an unemployment rate in near 16 percent.”
“This forecast says the state will be very slow to rebound from the recession, but all signs point to Indiana continuing to outperform the nation as a whole,” he said.
“Indianapolis will again be the state’s economic engine as the capital city continues to attract new businesses and existing firms begin adding to payrolls. However, other parts of the state will see some economic growth but not as fast as we all would hope,” Hicks said.
Hicks also has reviewed the economic forecast of the Indiana Econometric Model, which combines a U.S. economic model produced by Yale University with Ball State’s model.
The forecast analyzes the potential employment, labor force and income growth in the state’s nine largest private sectors. Personal income should rise by 4.81 percent by year’s end, with the construction (7.23 percent), manufacturing (7.07 percent) and transportation (6.99 percent) sectors leading growth.
Those sectors were hard hit during the recession and, like the economy as a whole, will not recoup their losses by the end of 2011, Hicks said.
Other sectors and their expected growth rates are:
Utilities, 1.2 percent
Health care, 3.02 percent
Retail, 3.19 percent
Finance and insurance, 3.96 percent
Wholesale, 5.34 percent
Information technology, 5.27 percent
Hicks said inflation will be tame, but the large money supply suggests inflation will accompany any strong growth in the economy.
“I believe that 2011 will be much better than the past two years, but uncertainty surrounding federal policy and continued discomfort with government debt in the U.S. and abroad will cast a shadow on this recovery,” he said.
