NWI economy idling

2013-06-04T16:45:00Z 2013-06-05T10:50:03Z NWI economy idlingBy Keith Benman keith.benman@nwi.com, (219) 933-3326 nwitimes.com

The region's economy remains stuck in neutral, with some small gains in hiring since the beginning of the year, according to the NWI Index for April.

For the third month in a row, the economic barometer devised by two IU Northwest professors remained stuck at a reading of 135, as compared to a statewide index reading of 148 and a national reading of 156.

However, there were some signs of hope in the individual components of the April NWI Index, including local employment, steel production and interest rate spreads, according to Micah Pollak, an assistant professor of economics at Indiana University Northwest.

The long moribund employment situation in Northwest Indiana improved for the second straight month, with 3,300 jobs added. In March, the regional economy added 1,700 jobs. That is a hopeful sign considering Northwest Indiana still has fewer jobs than it did before the recession started.

Since January, the Northwest Indiana economy has added 6,900 jobs.

"Employment is usually the thing that recovers the slowest," Pollak said. "The stock market is up, corporate profits are up, the housing market is recovering, so I think the job market is now just catching up."

The effects of the slow jobs recovery is being felt by businesses and agencies throughout Northwest Indiana.

At a Friday meeting of the Northern Indiana Commuter Transportation District, Planning and Marketing Director John Parsons reported ridership on the South Shore commuter railroad so far this year is down 6 percent as compared to one year ago.

Parson said lagging employment in Chicago's Loop as well as a lack of discretionary income for consumers overall may be contributing to the decline, which is occurring both during the work week and on weekends.

One risk to the U.S. and local economy in the near future is the federal budget sequester and the political fireworks that will come with the cobbling together of a federal budget for the next fiscal year, Pollak said.

"Emotionally for the public it may not mean much. We are all so used to getting through these near disasters," Pollak said. "So it won't have much effect on consumers. But there are some real and substantial cuts coming and that has the potential to really do some damage to our economy."

The NWI Index was formulated last year by IU Northwest Professor of Finance Bala Arshanapalli and Emeritus Professor of Economics Donald Coffin. It uses nine economic indicators in all, some local and some national, to gauge the status of the local economy.

Steel production also rebounded in April from a sharp decline last month and reached its highest level since August of last year, according to the NWI Index.

But several indicators tracking the national economy, and that significantly effect our local economy, were down. The Dow Jones Transportation Index sunk to a reading of 5910 in April, a decrease of 5.8 percent. But that's after powering upward by 24 percent in the previous six months.

The Housing Market Index fell 6.8 percent in April. However it is still significantly higher than one year ago.

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