MERRILLVILLE | Consumers have started to feel confident enough to buy big-ticket items again, including cars and homes, but Northwest Indiana business leaders remain concerned about jobs.
Members of The Times Board of Economists said the economy continues to gradually recover, but the unemployment rate still needs to improve.
Northwest Indiana had about 290,000 jobs before the Great Recession, but hit a low point of 250,000 jobs during the downturn, said Indiana University Northwest economics professor Micah Pollak. About 60 to 65 percent of the jobs that were lost have come back as the economy improved, but the region still needs to add 10,000 to 15,000 more jobs to reach pre-recession levels.
The laggard pace of job creation has slowed down the local economic recovery. Northwest Indiana auto dealers aren’t selling as many cars as their peers are in the northern part of the Chicagoland area, and that’s strictly because of jobs and underemployment, said Tim Roper, owner of Ford and Chevrolet dealerships in Hammond and Lowell.
“The recovery has yet to produce the higher-paying jobs in this area that are coming back in other areas,” he said. “It’s certainly a matter of income. People are working, but they’re making less.”
Roper is one of about two dozen members of the Board of Economists, which consists of local business leaders representing various industries such as steel, real estate and entertainment.
On a scale with one being the lowest rating and 10 being the best rating, the board rated the economy's health at 6.4 both regionally and nationally in the past three months. Their assessment of the the local and the national economy rose from January's survey response of 6 and 5.5, respectively.
One year from now, board members expect their business sectors to perform at 6.7 in the region and at 6.8 at the national level, an improvement over ratings of 6.5 regionally and 6.2 nationally in January.
Industry leaders told The Times the economy has been improving slowly but surely since the Great Recession, and consumer spending is starting to thaw. Bright spots include rising car sales, increased home buying, and farmland that has risen in value so much that it is being snapped up by farmers instead of developers.
International demand drove some of the activity. Car sales took off in Asia, and local farmers were paid a premium to provide Cargill's corn starch processing plant in Hammond with non-genetically modified crops, which are banned in Europe, said Porter County farmer Tim Stoner. The price of farmland in the area has soared to about $87,000 to $90,000 an acre.
Rising global demand has driven up commodity prices for row crops such as corn and soybeans, and that's paid off for Northwest Indiana farmers. Corn has been selling for more than $5 a bushel.
"The developing counties want the lifestyle that we've enjoyed since World War II," Stoner said "We increased our standard of living then, and the other countries that are now coming online want a better diet of meat, which means they need more commodities to feed to animals."
Business leaders were more optimistic than they've been at recent Board of Economists meetings, where industry leaders said the economy remained stagnant and suffered from paralyzing uncertainty. They still have concerns, such as with the looming end to the massive BP Whiting Refinery modernization project, which had put as many as 14,000 tradesmen to work.
BP was the savior of the region's building construction industry, which saw a 20 percent decline during the downturn, said William "Bill" Hasse III, the president of Hasse Construction. Area construction firms have faced with fierce competition for few jobs, tight margins and low returns.
More of a rebound in construction could lift slack demand for steel at a time when the industry is suffering from nearly 25 percent overcapacity, said Berlin Metals president Roy Berlin.
Steelmakers had a tough first half of the year, but are looking forward to some improvement in the next six months, Berlin said.
Residential construction has been picking up, and that helps the industry because steel goes into window frames, roofs, and heating and air conditioning systems.
But, despite recent price increases, local steel mills aren’t likely to add jobs anytime soon.
“I don’t see the mills as a driver for employment, since they’re becoming more and more advanced in their productivity,” Berlin said. “I don’t see them increasing employment because the demand for steel is already well supplied. New mills have just been cannibalizing existing mills.”