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IU Economists Forecast Slowing Economy, But No Recession


Indiana University economists predict slow growth across Indiana’s economy in 2020, while the global economy grows at the slowest rate since the 2009 financial crisis. The annual outlook released by the Kelley School of Business shows ongoing trade and political issues will lead to economic volatility in 2020.

The forecast projects global economic growth will continue to slow, but recent data steered authors away from forecasting a recession in the coming year.

Economist Kyle Anderson says household spending is up while business investment is down, an imbalance that will even out one of two ways.

“Either this business investment weakness is gonna slow the economy and consumers will pull back, and that’s kind of the recession risk story that’s going on,” says Anderson. “Or consumers will continue spending, businesses will feel better about the economy, maybe we get some positive trade news, and then business investment picks up and there’s potential on the upside.”

Researchers predict Indiana’s economic output will continue to grow next year by a rate of about 1.25 percent but will lag the rest of the country due to expected declines in vehicle sales.

Current trade disputes and policies are projected to continue to affect Hoosier businesses in both the agricultural and manufacturing sectors. Finance associate professor Cathy Bonser-Neal says the uncertainty has challenged industries across Indiana.

“It’s hurt the ability of businesses to plan on further investment given the tariffs that would be imposed and the uncertain environment about that,” says Bonser-Neal.

The forecast also shows unemployment in Indiana will likely remain low in 2020, forcing businesses in need of workers to look for ways to compete for talent including raising wages.

The IU Kelley School of Business plans on stopping in seven other cities before Thanksgiving to discuss national and statewide and local outlooks for next year.

Contact Samantha at shorton@wfyi.org or follow her on Twitter at @SamHorton5.

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