Indiana’s economy is showing signs of life as banks increase lending, real estate developers launch projects that have been on hold and consumers buy big-ticket items like cars.
However, experts and business owners caution that the recovery is still fragile and say high gas prices, the European debt crisis and other factors could cause it to stall.
Though unemployment remains at 8.7 percent, overall employment in Indiana hit 2.81 million in December, its highest level since March 2009, the Indianapolis Business Journal reported.
Indiana University’s index of leading economic indicators, which measures manufacturing, housing, transportation and banking activity nationwide — rose in January to its highest level since Sept. 1, 2008.
“We’re just seeing this steady rebound,” said Norm Bafunno, president of the Toyota plant in Princeton, Ind., which hired 170 workers permanently last year and expects similar growth this year.
This isn’t the first sign of life since the economic recovery began in mid-2009, but many businesses remain wary because of several false starts. Rising gas prices are a primary concern.
“The cloud is really fuel price. If it spikes, buyer behavior we know will change at some point,” Bafunno said.
Eric Rowland and his partners at Rowland Design, an Indianapolis architecture and interior design firm, have seen an increase in requests for proposals for new projects. Those include recent requests from Indianapolis-based mall manager Simon Property Group Inc. for interior refurbishments that it had not done the last few years.
As a result, he offered a job to someone for the first time in four years in late February. But it was for a temporary contract position, not a full-time position.
“Because it’s been tentative for so long, I was a little reluctant to make a permanent commitment,” Rowland said.
One factor tempering enthusiasm is fear of inflation, which could bring an abrupt halt to consumer spending and confidence.
Still, Bob Jones, CEO of Evansville-based Old National Bank, sees rising confidence among Hoosier businesses. He said his company has started advertising its loan services and even launched an in-house competition for its commercial loan officers this year — the first time it has done so since 2008.
“You’ve begun to get in year-end financial statements that show that the financial quality of borrowers is better,” Jones said. “Clients, they’re beginning to talk about inventory increases, growing capacity and hiring people.”
Tom Theobald, senior vice president for Chicago-based real estate developer Verus Partners, said growth among manufacturers and distribution companies has picked up so much that it has outstripped available industrial space in the Indianapolis area. New development ground to a halt in 2010 and 2011, and vacancy rates for modern bulk distribution sites is at a record low, he said.
Those dynamics recently prompted Verus to renew work on a 771,000-square-foot industrial development in Plainfield that had been on hold 2007 even though it has no tenants signed up yet. In the past six weeks, Verus has received three requests for proposals from companies interested in occupying the space.
