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Dean: Region should see growth in 2017

November 16, 2016

KOKOMO, Ind. —  The August 24 tornadoes that swept through Kokomo, coupled with plans for two large apartment complexes, should create growth in the construction and trades industry in 2017.

Alan Krabbenhoft, dean of the Indiana University Kokomo School of Business, shared his insights into north central Indiana’s economy in 2016, and what he anticipates in 2017, during the IU Kelley School of Business annual Business Outlook Panel last week.

“Our state and region are already operating at a level which most economists would describe as full employment,” he said. “Overall, the forecast is for very modest increases in the level of employment.”

Krabbenhoft said the region generally saw unemployment rates consistently lower than the national average, and that agricultural production experienced “a sizeable increase” over 2015, due to better weather conditions. However, he cautioned, those were offset somewhat by lower prices per bushel.

He was joined by Kelley School of Business faculty Catherine Bonser-Neal, associate professor of finance, Robert Neal, associate professor of finance, and Kyle Anderson, clinical assistant professor of business economics, speaking to an audience of nearly 100 business professionals, government officials, and students from the Kokomo CEO program.

Bonser-Neal noted that the economists prepared their forecast before the November 8 election, and dramatically wadded the paper into a ball and dropped iton the floor. She assured the audience, however, that the economy is like a freight train, and cannot be stopped quickly. She predicted national economic growth of about 2 percent

Bonser-Neal used basketball as an analogy for the economy, saying that in 2016, “we had a team of players on the court, but only one was shooting, and that’s been the consumer,” she said. “We need them all to step up their games.”

While noting that the U.S. election, as well as the vote by Great Britain to leave the European Union, creates uncertainty, which tends to hinder investment, she still anticipates more government spending and business investment, which will help with growth.

“We’re starting to draw a little more on our bench of players,” she said.

Other forecast highlights included:

• Indiana will close out 2016 with real economic growth. Energy prices will remain low, with average prices similar to 2016. This will be insufficient to reignite the oil boom, but it will allow U.S. production to stabilize of 3.0 perce

• Given the state’s positive employment picture, Indiana’s housing market will continue its expansion in 2017. New single-family housing starts are expected to increase about 9 percent in 2017.

• Mortgage interest rates will remain attractive, with the 30-year rate about 4 percent, and Indiana’s home affordability will remain attractive.

Indiana University Kokomo serves north central Indiana.

Last updated: 11/16/2016