A Northwest Indiana economy that has been idling along in neutral for the past year could finally shift into gear within six months, according to the most recent reading from the NWI Leading Index.
December's reading for the Leading Index signals "strong growth," with a rebounding housing market leading the way, according to Micah Pollak, an assistant professor of economics at IU Northwest.
"It looks like housing is the big story here," Pollak said. "Housing is a strong indicator. It's the first thing hit in a recession and usually it's the first thing that gets better during a recovery."
In addition to housing, all the other components of the Leading Index, including manufacturing and transportation, showed significant gains.
For the second straight month, the NWI Coincident Index registered a reading of 99, about where it has stood for more than a year. The NWI Coincident Index shows the state of the local economy at the current time.
A sharp drop in the local employment category kept the Coincident Index mired where it has been. But there were rays of hope. Steel production, a key component of the index, increased 81,000 net tons as compared to the previous month.
"I think steel is a good sign," said Bala Arshanpalli, a professor of finance at IU Northwest. "Because that means people are buying cars and that means people are spending money."
With public anxiety over the federal government's "fiscal cliff" subsiding with the deal signed by President Obama at the beginning of the year, there may be even more cause for optimism going forward, Arshanapalli said.
The Coincident Index and the Leading Index are both part of the NWI Index, which was devised by Arshanapalli and Professor Emeritus of Economics Donald Coffin at the School of Business and Economics at IUN. It is published monthly in The Times and at nwi.com to give people in the region a leg up on where our local economy stands and where it might be heading.
The December readings of the NWI Index are largely supported by other reports in recent weeks.
On Wednesday, the U.S. Department of Commerce reported U.S. Gross Domestic Product shrunk at an annual rate of 0.1 percent in the fourth quarter, a sign the national economy is still struggling to recover from the Great Recession.
A survey of The Times Board of Economists, a group of 25 region business leaders, yielded about the same reading in January as that recorded three months ago. But the business leaders were cautiously optimistic things would be at least slightly better within a year.
Tim Stoner, a Porter County farmer and businessman who is a member of that group, said farmers at this point are probably even a little more optimistic than others.
In fact, strong commodity prices have helped buoy his industry throughout the recession and the recovery, Stoner said. And burgeoning demand for food in developing countries means it will probably stay that way.
"The way I look out the window, I see a pretty positive 2013 for farmers," Stoner said. "For a typical Midwestern farmer, even with the cost of production, there's profit to be made right now."
Stoner is also bullish on the region he calls home.
"People say in Northwest Indiana we have problems," Stoner said. "But you go to other parts of the country and they just wish they had the problems we have. We have a vibrant economy. And although steel is still a big part of our economy, we are much more diversified today."