ANDERSON — With the coronavirus pandemic surging around the world, the key word for the economic outlook is uncertainty.
During the annual Kelley School of Business Outlook on Tuesday at the Anderson Rotary Club, the general consensus was that the positives will outweigh the negative news in 2021.
Kyle Anderson, a professor at the Indiana University Kelley School of Business, said the Indiana economy remains cyclical as the state is still predominantly reliant on manufacturing.
“For the first half of 2020 the manufacturing sector was hit hard and resulted in most of the job losses,” he said. “Manufacturing has started to recover in the last few months.”
Anderson said Indiana has lost 60,000 jobs since February and many people are not currently looking for employment.
“Indiana is stronger than comparable states,” he said. “The economic growth is around Indianapolis, the areas near Louisville and the college towns.”
He said Indiana’s economy remains strong in construction, transportation and warehousing and health care; the retail and education sectors are currently the weakest areas.
“Both have been hit really hard,” Anderson said.
He expressed optimism the growth in 2021 will offset the damage done in 2020 by the pandemic.
“We basically lost two years,” Anderson said. “We won’t return to the 2019 economic model until the end of 2021.”
He projected Indiana’s unemployment rate next year will range by 4% and 5%.
Lonnie Leeper, an associate professor of finance at the Anderson University Falls School of Business, said there are opportunities for economic growth in Anderson and Madison County.
He noted during the first quarter of 2020 the unemployment in Madison County was declining and closing the gap between the local and state unemployment rates.
“Uncertainty is the key word,” Leeper said. “The strength and opportunities locally are in diversification of manufacturing (and) expansion of local industrial companies like NTN Driveshaft and Sirmax.”
Leeper said the Anderson Advanced Manufacturing Program is unique in that it is developing the workforce based on local needs.
He said the real estate market is strong, particularly in southern Madison County.
“The more businesses we attract, the more people will locate here,” Leeper said. “That will encourage business growth.”
Anderson said Indiana has fared better in terms of unemployment rates as compared to Illinois, Michigan and Ohio.
“People in the lower-paying jobs have been hit the hardest in Indiana,” he said, “particularly the restaurant and hotel businesses.”
Leeper said how the local economy rebounds will depend on the response to the local labor market needs.
“How does the county and Anderson adopt to the post pandemic economy,” he said.
“The hotel and tourism industries will be closely tied to how quickly a vaccine becomes available sometime in the second half of 2021,” Leeper said.
He took a cautious approach on the impact to the state economy if Gov. Eric Holcomb orders new coronavirus restrictions.
“As we face those decisions it’s important that the county looks to the safety and prosperity of the community,” he said.
Andrew Butters of the Kelley School of Business projected the U.S. economy will grow at a rate of 3.5% in 2021.
He said the U.S. economy started to rebound in the third quarter of the year.
“We won’t see pre-pandemic levels, not until the end of 2021,” Butters said.
He said the federal deficit has tripled in the past year and is now at 15.2% of the gross domestic project.
“The deficit could put a drag on the economy,” Butters said.