Report: Indiana expected to shrug off any economic slowdown

Indiana’s economy is expected to remain solid in 2017 despite a possible nationwide slowdown, according to an economic projection released by Indiana University today.

“The U.S. economy during 2016 has underperformed, even relative to our diminished expectations a year ago,” said Bill Witte, associate professor emeritus of economics at Indiana University. “Looking to the future, we see little reason for any real optimism, but we do think the economy will continue to muddle through, matching the past year, or perhaps do a little better.”

The university’s experts project the nation’s output growth to average slightly above 2 percent in 2017.

According to the Indiana University Kelley School of Business' annual economic forecast, demand for Hoosier-made goods could help the state evade the nation’s economic doldrums. The state also benefits from having a diversified manufacturing base, which includes the production of advanced materials such as pharmaceuticals.

"In terms of gross domestic product growth, 2016 looks to reverse the trend of Indiana underperforming the overall nation,” said Timothy Slaper, research director of the Indiana Business Research Center. “We currently forecast that 2016 will close out with real economic growth of 3 percent, compared to between 1.6 and 2 percent nationwide.

“Indiana has trailed the United States in GDP growth in four of the past five years but is expected to grow at a slightly faster rate than the U.S. through 2018.”

The report noted that some of the strongest economic activity in the state was in the Indianapolis-Carmel area, “reflecting broader growth in urban economies while more rural economies continue to struggle.”

“Overall, the Indianapolis economy continues to be fairly healthy,” said Kyle Anderson, clinical assistant professor of business economics at Indiana University. “The region is at full employment, and continued job growth will ensure that it stays there.”

Anderson noted that low unemployment and continued growth could lead to a boost in wages and that low interest rates will encourage people to build homes.

"Indiana also has a healthy blend of a comparatively low unemployment rate alongside an increasing labor force participation rate," Slaper said. "Indiana has the youngest population in the nine-state peer group, which can help in terms of generating productivity — particularly now — as the United States enters the front end of retirements for the baby boomers."

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Call IndyStar reporter Kris Turner at (317) 444-6047. Follow him on Twitter: @krisnturner.