Northwest Indiana economy grew by 1.9 percent last year

2014-02-26T23:25:00Z 2014-02-27T21:38:10Z Northwest Indiana economy grew by 1.9 percent last yearJoseph S. Pete joseph.pete@nwi.com, (219) 933-3316 nwitimes.com
February 26, 2014 11:25 pm  • 

Northwest Indiana grew 1.9 percent last year, trailing both the state and nation.

The United States grew at a rate of 3.05 percent and Indiana saw 4.3 percent growth, according to indices similar to Northwest Indiana Index. Northwest Indiana's laggard growth is still encouraging, given how long it has been going on, said Micah Pollak, an assistant professor of economics at Indiana University Northwest.

"While our rate of growth is slower than the nation and the state, it has been consistent, providing more evidence of sustained, even if perhaps limited, economic recovery in the region," Pollak said

Indiana University Northwest economics professors developed the Northwest Indiana Index to better track the local economy. It tracks local and national metrics, including steel production, the Dow Jones Transportation Index and unemployment in the Gary metropolitan area.

The index rose slightly in December to 137.3, up from 137.1 a month earlier. It was the 12th straight month it increased.

Expect more of the same over the next six months. Pollak forecasts a weak growth rate of about 1 percent over that period.

"While the outlook for manufacturing and transportation are promising, this is offset by a housing market that is beginning to slow and stabilize after a period of strong recovery, the effects of the government shutdown are continuing to dissipate, and there is some of the financial uncertainty surrounding the potential slowing of quantitative easing," he said.

Employment in the Gary metro fell by 500 employees in December, and average manufacturing hours rose by 0.1 percent, but Pollak said both changes were negligible. Steel production declined by 38,000 tons, or about 2 percent, but it was a seasonal change.

Nationally, the Housing Market Index rose by 5.6 percent, the Dow-Jones Transportation Index dropped by 1.73 percent and the U.S. Leading Index increased by 1.12 percent.

"Here again we have a somewhat mixed bag," he said. "While the housing market improved in December it's likely that we won't continue to see this kind of strong growth. In the last few years the housing market has rebounded strongly but without signs that the rest of the economy is expanding we're unlikely to see these kinds of gains in the next year."

Broadly, there is concern about the implications of ending quantitative easing and uncertainty over the path the new Federal Reserve chairwoman will take, Pollak said.

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