Fri Nov 8, 2019
Author: RV News Stafff
Indiana University’s (IU) Kelly School of Business released a forecast Thursday showing a projected slowing of the U.S. economy in 2020. The forecast calls for expansion of approximately 2 percent nationally and approximately 1.25 percent for Indiana. Factors behind the findings include a tight labor market and the outsized presence of manufacturing in the area.
Contributing factors in the slowdown include international trade challenges and political dysfunction, both of which have battered business and consumer confidence and disrupted business supply chains. The report also predicts that U.S. employment will decline significantly by late 2020 and that the labor market will continue to be tight creating a challenge for businesses.
Bill Witte, associate professor emeritus of economics at IU says the total number of job openings reached its peak in late 2019. He noted that auto sales have been flat for nearly two years and the average hours worked as been flat during the past year as well. He says the reliance of the U.S. economy on consumer spending as a disturbing trend. He anticipates weaker growth for 2020 than the previous two years due to “massive uncertainty in the current situation.”
Indiana’s growth is expected to slow more than the national economy due to tight labor markets and the outsized presence of manufacturing. Ryan Brewer, associate professor of finance at Indiana University-Purdue University Columbus and author of the Indiana forecast says the manufacturing market contracts more quickly than other facets of the economy. Additionally, the existence of tight labor markets impedes employers’ ability to grow, he says.
Another factor noted by the report is that many corporations have recently focused efforts on buying back stock as opposed to make capital investments. Indiana’s manufacturers have also been impacted by the trade war with China.
Taking a look at the global economy, the research noted that the world is about to record its most sluggish growth since the financial crisis of 2009. Global growth for 2020 is projected at 3.4 percent with the risk of further erosion.
For the full report, click here.