MERRILLVILLE | Northwest Indiana should outperform the state and nation economically next year, but job growth and uncertainty remain major concerns, an economist said.
Northwest Indiana employers are only likely to add a modest amount of jobs in 2014, and a national economic uncertainty index has climbed higher a few times over the last three years than it was immediately after the Sept. 11 terrorists attacks or during the Iraq War, said Ball State University Professor Michael Hicks, director of Ball State's Center for Business and Economic Research.
"There's a very robust argument that the uncertainty businesses are feeling is linked in part to public policy, but also to general difficulty in the economy," Hicks said. "You have a very toxic mix of low demand and low labor supply."
Hicks delivered his economic outlook for Indiana Friday to a business crowd at the Radisson Hotel at Star Plaza. He projects Indiana will fare better than the rest of the nation economically, and Northwest Indiana will do better than the state as a whole because of a rebounding demand for durable goods.
Statewide, gross domestic product should increase by 2.19 percent in 2014, while the nation's GDP is projected to grow by 1.9 percent to 2.1 percent, Hicks said. A more robust 3.1 percent growth is forecast for Northwest Indiana.
Northwest Indiana, Indianapolis and the Elkhart area should see strong growth because they have a lot of factories, and manufacturing has come back from its slump, Hicks said. Demand is returning because consumers are no longer putting off major purchases.
"About half of all lost economic activity during the recession was lost in manufacturing and durable goods," he said. "That's what people don't buy. For some reason, people continue to buy food during a recession, but not cars, washing machines and dishwashers."
Durable goods manufacturing is expected to grow by 3.6 percent next year, both in Northwest Indiana and statewide.
Manufacturers are more productive than ever, and the slow growth that's expected likely will not translate into significant employment gains, Hicks said. Northwest Indiana is expected to pick up 3,900 jobs next year, and the state should add about 57,380 jobs.
"That's not a lot," he said. "There will still be an imbalance in the labor market."
A bright spot should be construction, which is a rare industry that provides good-paying jobs to low-skilled young workers who gain the opportunity to develop into skilled tradesmen over time, Hicks said. The constructions sector is expected to grow by 2.6 percent in Northwest Indiana next year, largely because of a pent-up demand for homes.