Economists: Economy will be good, but down from 2018


JASPER — The 2019 economy will be down a bit from 2018, but still good, according to a forecast from three Indiana University professors.

The professors- — Center for Economic Model Research Co-Director Willard Witte, Indiana Business Research Director Charles Trzcinka and Director of Indiana University MBA at IU Columbus Ryan Brewer — presented their predictions for the national and state economies Thursday at the Rotary Club of Jasper’s 14th annual Indiana University Kelley School of Business Economic Forecast Luncheon. Dubois Strong President Ed Cole presented on the local economy.


At the local level, Cole said, there’s a lot going on. Unlike a lot of rural Indiana counties, Dubois County has been growing. In the last five years, the county’s population has increased by 500 people. The county also has low unemployment — 2.4 percent in December — and has 4,000 more workers commute into the county than commuting out.

There are still jobs to fill. That’s led local stakeholders to several initiatives to increase workforce attraction, with Dubois Strong at the helm of a few efforts. For the last two years, the organization has been running a Facebook advertising campaign targeting surrounding areas with higher unemployment and encouraging people to check out what Dubois County has to offer. In 2018, that campaign brought 74,000 new page views to the Dubois Strong website, with 1,025 of those moving on to websites for area employers.

Quality of place has also been a local focus, with every municipality embarking on at least one project in recent years, including new parks and infrastructure updates. Recently, Dubois Strong won the Ready Communities Quality of Place and Workforce Attraction planning grant for $50,000. The next steps, Cole said, are hiring a consultant to help identify countywide needs and come up with a plan to meet those needs. Then, Dubois Strong will apply for the next stage of the grant, which could yield up to $250,000.

Of course, attracting new workforce members means an increased need for housing, which Cole said is increasingly being met. In 2015, Dubois Strong conducted a housing study that showed the county needed 400 to 675 new housing units. In the five years since, 225 units have been added with 520 more in progress, Cole said.

Looking at the county as a whole, Cole said, 2019 looks “outstanding.”

“We just need more people,” he said.


At the state level, Brewer sees a good year on the horizon, as long as the state’s long period of economic expansion holds out.

Later this year, the state will hit the record for its longest period of expansion.

“The question is can expansions last forever?” Brewer asked.

Indiana, he said, tends to expand faster than the rest of the country, thanks in part to its heavy manufacturing base. But that base also means that when the expansion stops, Indiana tends to contract faster, too. The key, Brewer said, will be investing in initiatives that can protect against the contraction, such as technologies.

The automotive industry is a big driver for the state, Brewer said, and it’s showing a small decrease in 2019, and the state is somewhat weak in investments, Brewer said, but other indicators are positive. The state has a low unemployment rate and a high workforce participation rate — some of the best in the Midwest, behind only Iowa and Wisconsin. Prices, too, look stable across the Midwest, leading to strong consumer confidence.

The state’s tax laws show an advantage for businesses wanting to locate here, and the state’s debt level is healthy, Brewer said, with the debt-to-gross-domestic-product ratio at 13.8 percent.


At the national level, Witte said, the forecast is hazy.

The recent government shutdown affected the commerce department, which collects and distributes economic data, so economists have not yet received statistics for the last quarter of 2018. However, Witte said, he does have statistics from the Bureau of Labor Statistics, the Federal Reserve and the private sector. Although that data offers only an unclear picture, Witte said, he is comfortable forecasting 2019 as a good year, but down from 2018.

“But remember, 2018 was a really good year,” he said. “The best of the recovery.”

Potential risks for the 2019 economy include the inflation that can accompany a strong economy, the national debt, which is now bigger than the U.S. economy as a whole, trade wars and divisions among the American people. Inflation and the national debt don’t seem to pose a large threat, Witte said. But trade wars are a real concern, as is the current political climate. Division, he said, is nothing new for the country. What’s different now is that the two sides are increasingly unwilling to compromise, which makes the two extremes more attractive.

“You rule out compromise, and that’s a difference,” he said. “That’s a risk.”

Trzcinka expects the stock market, like the economy as a whole, to grow, but not a lot. He’s expecting a volatile stock market in 2019 with below-average returns.

“But I’m not forecasting negative returns,” Trzcinka said.

Risks for the stock market mirror those Witte listed for the economy as a whole, though Trczinka added China’s slowing economy and the Social Security deficit as additional risks.

Neither Witte nor Trzcinka know what to expect with China’s slowing economy. Last time China’s economy slowed, Witte said, they weren’t a big enough player for it to matter. That’s not the case anymore. Still, Witte figures that before the Chinese economy would have any negative affect on the U.S. economy, it would become a dire situation for the Chinese. But there’s no way to know for sure. Economic data from China is unreliable, Witte said. The concern is that China’s economy will have no effect on the U.S. economy after years of providing growth, rather than that it will have a negative effect.

Overall, the economists agreed that the 2019 economy looks good, as long as we can stay calm. As long as consumers and Wall Street don’t panic, Witte said, we’ll be fine.

“The only thing we have to fear is fear itself,” Witte said, quoting former President Franklin Delano Roosevelt.

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