The Times Board of Economists

THE TIMES BOARD OF ECONOMISTS: No economic tonic for uncertainty

2013-01-27T00:00:00Z 2013-12-18T16:30:39Z THE TIMES BOARD OF ECONOMISTS: No economic tonic for uncertaintyBowdeya Tweh, (219) 933-3316
January 27, 2013 12:00 am  • 

MERRILLVILLE | If anyone has a cure for a fiscal cliff hangover, Northwest Indiana's business community would like to see it.

Members of The Times Board of Economists said protracted political bickering and media coverage of the so-called fiscal cliff and debt ceiling developments have done little to reduce or remove economic uncertainty.

In a survey, the board said the overall economy has been stagnant since the fall season, although their individual sectors are performing better than they were in October.

Gail Zurek, Northern Indiana area director of the Better Business Bureau, said the more the issues are talked about, the more nervous consumers get about spending money. Zurek is one of 25 members of the board, which is composed of business leaders representing various industry sectors.

"You could argue their understanding of what the debt conversation is and what that means, but I'm not sure that the typical consumer who's going out there to buy products in the marketplace understands the complexity of it," Zurek said at the meeting Jan. 17 at Innsbrook Country Club. "What I would say is that it makes them uneasy."

On a scale with one being the lowest rating and 10 being the best rating, the board rated the economy's health at a 6 regionally and 5.5 nationally in the past three months. Ratings were flat from October's survey response. One year from now, board members expect their business sectors to perform at 6.5 in the region and 6.4 at the national level, which held steady from the previous survey.

The debate over the nation's economic future has shifted to the debt limit as the U.S. House of Representatives voted to enact a temporary suspension of the debt limit, which caps how much the government can borrow to meet existing obligations. However, the threat of sequestration curtailing federal spending in the next few months and consumers having less money to spend as a result of the expiration of a payroll tax cut still cast a pall over the economy.

The Conference Board's Consumer Confidence Index fell to 65.1 in December from 71.5 in November as a result of the uncertainty in the economy. The index base is 100.

Tim Roper, owner of Ford and Chevrolet dealerships in Hammond and Lowell, said businesses need certainty in order to be successful, and the government needs to do a better job of creating that feeling within the marketplace. Automobile sales in the United States hit a five-year high in 2012, but he said consumers are challenged because there's still pressure on their incomes.

Seeing stronger job growth would help with that, but Northwest Indiana hasn't done as well to attract as many jobs to the area as other parts of the state.

Nonfarm employment in Lake, Porter, Newton and Jasper counties was down by 6,500 during the 2012 calendar year, while the state gained 58,800 jobs, according to data not adjusted for seasonal swings in employment.

"If you look at cities like Gary, Detroit or our northern towns, when you lose jobs and you don't have job creation. That causes the business to leave and that causes the home to become vacant and that becomes less money for government for schools," Roper said.

Joshua Halpern, president of Schererville-based Albert's Diamond Jewelers, said it's difficult to forecast retail sector performance for the year, but sales have been "pleasantly up" in January. From the roller coaster ride retailers had last year, he said he's planning for sales to be flat but hoping for it to do better.

"I think if we can clear this fiscal cliff business and we can talk about this debt ceiling and get it past us, 2013 could be a very good retail year," Halpern said. "But we have to settle these couple issues." 

Spending also is likely to get a boost in the coming months as people begin getting their tax returns processed and begin spending their refunds.

Radio station owner Leigh Ellis said he's found consumers aren't the only ones who are becoming more responsive to information presented in the media. Ellis, whose Radio One Communications owns four radio stations, said advertising representatives from different industries are changing their buying practices based on economic headlines.

"Decisions are more difficult," Ellis said. "We're finding the people that we talk to as far as advertising, they're more cautious. They're looking for more added value. where they used to sit and say, 'This is our budget for the year. This is what we want to do.' We're seeing that notch down to monthly and sometimes even weekly when we're talking to the national clients."

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