Economic growth has been stagnant in the four years following the recession, according to an IU news release, averaging output growth of 2 percent.
Bill Witte, an associate professor emeritus of economics at IU, is a member of the annual forecast panel that met in Indianapolis on Thursday.
“During the past year, the United States economy has given clear signs that it is finally breaking out of the rut it had been stuck in during the first four years of the recovery,” Witte said in the release. “Looking ahead, we expect the coming year to produce a continuation of these positive trends.”
In 2015, output growth is expected to rise about 1 percent. The increased strength of the housing sector and more government spending have contributed to the rise, according to the release.
Witte cautioned that the current economic environment in the U.S. makes predictions uncertain.
“But this favorable outcome is far from a sure bet,” Witte said in the release. “The level of uncertainty in the current environment is high.”
For Indiana residents, the economic growth won’t be so high, said Timothy Slaper , research director of the Indiana Business Research Center in the Kelley School, in the release.
While the growth rate in Indiana will go up, it will be slightly lower than the national average.
“Indiana’s GDP grew more quickly than the U.S.’ in 2010, about twice as fast as the nation,” Slaper said in the release. “In the three following years, Indiana’s economic output growth rate was a tad behind the U.S, and 2014 is expected to close the year at just a fraction of the national rate. This trend, being just a half step behind the national average growth rate, is forecasted to continue through 2017.”
Central Indiana’s economic growth has been stronger than it has been in the past few years.
The local economy for the area will add 40,000 new jobs by the end of this year, said Kyle Anderson , assistant professor of business economics in the Kelley School of Business at Indianapolis , in the release.
Currently, 45,000 people are unemployed in the Indianapolis metropolitan statistical area , Anderson said. In consequence, employment growth will taper a little in 2015 as it’s not feasible to add 40,000 new jobs.
It’s likely the unemployment rate will still drop to 4 percent, though, according to IU.
“Wages have not grown as fast as employment, with average weekly wages increasing only 1.4 percent in the past year,” Anderson said in the release. “However, with unemployment falling and hiring picking up, look for wage pressure to increase in 2015. For the first time in years, employees will have more leverage and employers will need to give wage increases to keep valuable employees.”
The panel said it expects Indiana to add a total of 55,000 workers in 2015, with the state’s unemployment rate expected to fall to 5.25 percent by the end of the year, according to the University.
The most important news for Indiana is that, come 2015, the state is set to return to the same level of peak employment from the last decade.
“Regaining the lost ground took longer than it should,” Slaper said in the release. “Initial employment gains weren’t brilliant, but by 2013, Indiana gained some 52,000 jobs in one year. Indiana hit that 52,000 mark by September of this year and is set to exceed our forecast for the year, with employment in the construction of buildings and transportation equipment manufacturing increasing by double digits.”
Kathrine Schulze
