Richmond forecast 2023
Director of the Business and Economic Research Center and Professor of Finance, Indiana University East
Richmond, the seat of Wayne County, is located on the eastern border of Indiana. Throughout this article, the Richmond region refers to seven east-central Indiana counties: Fayette, Franklin, Henry, Randolph, Rush, Union and Wayne.
As of 2022 Q1, the largest industry sectors in the Richmond region are manufacturing (13,218 jobs); retail trade (7,770 jobs); health care and social services (7,747 jobs); and accommodation and food services (5,365 jobs) (see Table 1).
According to 2020 U.S. Bureau of Economic Analysis data,1 Wayne County had the largest population and earned the highest total income in the region: approximately 32% of both the region’s total income ($9.47 billion) and total population (207,423 people). Wayne County was followed by Henry County, which earned 22% of the region’s total income and had 23% of the region’s total population.
Wayne County’s per capita personal income (PCPI) was $45,499, a growth of 7.3% from 2019. This was 88% of Indiana’s PCPI ($51,926) and 76% of U.S. PCPI ($59,510). Franklin County ($51,316) and Rush County ($49,889) had the highest PCPI values in the region. In fact, Wayne County experienced the least PCPI growth in 2020, up 7.3% from 2019, whereas Randolph County experienced the most growth with 12.6%, followed by Union County at 10.1% growth.
In this article, we will discuss the recent performance of key components of the regional economy, as well as Richmond’s 2023 economic outlook.
Labor market
Wayne County’s labor force was made up of 30,025 people in August 2022, representing 31.1% of the region’s total labor force (96,457 people). The county had a January-August monthly labor force of 29,521 people in 2022, down 0.36% (or 107 people) from 2021. While Franklin County (11,426 people), Henry County (22,332 people) and Randolph County (11,797 people) also maintained labor forces over 10,000 people in August 2022, the remaining counties in the region had much smaller labor forces. Between 2021 and 2022, Randolph County (+3.95%) saw the greatest growth in January-August monthly labor force, while Fayette County (-2.11%) recorded the greatest decline. The monthly labor force average for the entire region was 95,570 people, up 0.59% or 561 people from 2021 (see Figure 1).
Figure 1: Richmond region labor force and unemployment rate
Note: Data are not seasonally adjusted.
Source: Local Area Unemployment Statistics (LAUS) from the U.S. Bureau of Labor Statistics.
Over the first eight months of 2022, Fayette County had the highest monthly unemployment rate at 4%, while all the other counties in the region experienced unemployment rates both below 2.9% and below the same time period last year. While Wayne County recovered the most in the region from an unemployment rate perspective (down nearly 1.3 percentage points from 4.2% in 2021), Union County experienced the least improvement (down 0.6 percentage points from its already low monthly average of 2.8% in 2021). The overall January-August monthly unemployment rate for the region was about the same as Indiana at 2.8%, but compared favorably with that of the U.S. (3.8%).2
Jobs and wages
The region added 1,765 new jobs to the private sector in Q1 of 2022 (see Table 1), with the greatest contributions from manufacturing (+633 jobs) and health care and social services (+559 jobs), followed by transportation and warehousing (+296 jobs) and construction (+250 jobs). Other sectors that expanded by more than 100 jobs included retail trade (+107 jobs); professional, scientific and technical (+113 jobs); arts, entertainment and recreation (+110 jobs); and other services (except public administration) (+140 jobs). On the other hand, agriculture, forestry, fishing and hunting (-233 jobs) lost the most jobs, followed by administrative, support, waste management and remediation (-145 jobs).
Table 1: Employment by industry
| NAICS classification | Region | Indiana | ||
|---|---|---|---|---|
| 2022 Q1 | One-year change | 2022 Q1 | One-year change | |
| Total all | 65,091 | 1,807 | 3,050,054 | 106,672 |
| Total private | 53,692 | 1,765 | 2,669,533 | 107,212 |
| Manufacturing | 13,218 | 633 | 535,306 | 14,667 |
| Retail trade | 7,770 | 107 | 313,341 | 2,383 |
| Transportation and warehousing | 1,341(D) | 296(ED) | 161,475 | 10,134 |
| Agriculture, forestry, fishing and hunting | 40(D) | -233(ED) | 14,774 | 49 |
| Mining | 16(D) | -19(ED) | 5,062 | 599 |
| Utilities | 189(D) | 74(ED) | 13,342 | -309 |
| Construction | 2,873 | 250 | 144,393 | 7,513 |
| Wholesale trade | 1,594(D) | 78(ED) | 126,308 | 6,981 |
| Information | 397(D) | 28(ED) | 26,485 | 1,044 |
| Finance and insurance | 1,548(D) | -51(ED) | 102,096 | 2,633 |
| Real estate and rental and leasing | 350 | 13 | 34,867 | 604 |
| Professional, scientific and technical | 1,082(D) | 113(ED) | 138,852 | 11,146 |
| Management of companies and enterprises | 349(D) | -10(ED) | 35,501 | 2,044 |
| Administrative, support, waste management and remediation | 2,474(D) | -145(ED) | 184,256 | 11,353 |
| Educational services | 685(D) | 57(ED) | 49,249 | 2,147 |
| Health care and social services | 7,747(D) | 559(ED) | 409,679 | 1,774 |
| Arts, entertainment and recreation | 330(D) | 110(ED) | 32,810 | 2,799 |
| Accommodation and food services | 5,365(D) | 61(ED) | 255,543 | 25,440 |
| Other services (except public administration) | 1,644(D) | 140(ED) | 86,191 | 4,690 |
Notes: (D) indicates data with one or more counties excluded due to disclosure issues and (ED) indicates an estimate made based on such data for 2021 Q1 and/or 2022 Q1.
Source: Quarterly Census of Employment and Wages (QCEW) data from the U.S. Bureau of Labor Statistics, downloaded via Hoosiers by the Numbers.
The management of companies and enterprises sector (+42%) experienced the highest percentage growth in weekly wages, while the arts, entertainment and recreation sector (-14.5%) underwent the highest percentage drop in the region (see Table 2). Other sectors that suffered a decline in weekly wages were agriculture, forestry, fishing and hunting (-9.6%) and information (-2.8%). The remaining sectors all experienced growth in weekly wages ranging from 0.2% in utilities to 14.7% in transportation and warehousing.
Table 2: Average weekly wage by industry
| NAICS classification | Region | Indiana | ||
|---|---|---|---|---|
| 2022 Q1 | One-year change | 2022 Q1 | One-year change | |
| Total all | $820 | 6.9% | $1,127 | 9.8% |
| Total private | $820 | 7.3% | $1,143 | 10.5% |
| Manufacturing | $1,030 | 4.6% | $1,515 | 10.1% |
| Retail trade | $568 | 10.7% | $672 | 12.2% |
| Transportation and warehousing | $1,000(D) | 14.7%(ED) | $993 | 11.2% |
| Agriculture, forestry, fishing and hunting | $680(D) | -9.6%(ED) | $850 | 8.0% |
| Mining | $763(D) | 6.4%(ED) | $1,443 | 5.3% |
| Utilities | $1,939(D) | 0.2%(ED) | $2,268 | 9.4% |
| Construction | $890 | 1.0% | $1,207 | 4.3% |
| Wholesale trade | $975(D) | 3.6%(ED) | $1,601 | 9.9% |
| Information | $728(D) | -2.8%(ED) | $1,436 | 5.9% |
| Finance and insurance | $1,341(D) | 12.1%(ED) | $1,942 | 5.0% |
| Real estate and rental and leasing | $631 | 4.1% | $1,168 | 15.3% |
| Professional, scientific and technical | $910(D) | 7.9%(ED) | $1,541 | 9.8% |
| Management of companies and enterprises | $2,064(D) | 42.0%(ED) | $2,966 | 17.2% |
| Administrative, support, waste management and remediation | $691(D) | 12.2%(ED) | $817 | 16.2% |
| Educational services | $624(D) | 5.6%(ED) | $848 | 2.8% |
| Health care and social services | $993(D) | 6.8%(ED) | $1,129 | 15.4% |
| Arts, entertainment and recreation | $355(D) | -14.5%(ED) | $872 | 20.4% |
| Accommodation and food services | $319(D) | 8.1%(ED) | $386 | 12.9% |
| Other services (except public administration) | $511(D) | 3.9%(ED) | $735 | 7.9% |
Notes: (D) indicates data with one or more counties excluded due to disclosure issues and (ED) indicates an estimate made based on such data for 2021 Q1 and/or 2022 Q1.
Source: Quarterly Census of Employment and Wages (QCEW) data from the U.S. Bureau of Labor Statistics, downloaded via Hoosiers by the Numbers.
Housing market
Over the first eight months of 2022, Randolph County saw the greatest percentage increase in both new listings (+20.7% to 181 homes) and closed sales (+26.4% to 163 homes), while Union County experienced the greatest percentage decline in both measures (-69.2% to 4 homes and -57.1% to 3 homes, respectively) when comparing to the same period of 2021 (see Table 3). All counties in the region recorded an increase in median price, ranging from Franklin County (+6.3% to $243,000) to Union County (+139.2% to $215,000).
On the other hand, new listings in Indiana remained about the same (-0.1% to 74,827 homes) whereas closed sales were down by 4.4% to 61,183 homes, despite the median price increasing by 13.3% to $235,000. The closed sales/new listings ratios of the counties suggest that Henry County (97%) had the fastest-selling housing market in 2022, while Fayette County (74.1%) had the slowest market in the region. Other counties that compared favorably with the state (81.8%) were Randolph County (90.1%) and Wayne County (86.3%).
Table 3: Housing market update
| New listings | Closed sales | Median price | |||||||
|---|---|---|---|---|---|---|---|---|---|
| 2021 | 2022 | 2022 change | 2021 | 2022 | 2022 change | 2021 | 2022 | 2022 change | |
| Indiana | 74,876 | 74,827 | -0.1% | 63,983 | 61,183 | -4.4% | $207,500 | $235,000 | 13.3% |
| Fayette County | 127 | 139 | 9.4% | 96 | 103 | 7.3% | $95,000 | $122,000 | 28.4% |
| Franklin County | 156 | 140 | -10.3% | 137 | 111 | -19.0% | $228,500 | $243,000 | 6.3% |
| Henry County | 361 | 329 | -8.9% | 322 | 319 | -0.9% | $115,250 | $130,000 | 12.8% |
| Randolph County | 150 | 181 | 20.7% | 129 | 163 | 26.4% | $94,900 | $108,200 | 14.0% |
| Rush County | 129 | 149 | 15.5% | 134 | 120 | -10.4% | $134,900 | $151,000 | 11.9% |
| Union County | 13 | 4 | -69.2% | 7 | 3 | -57.1% | $89,900 | $215,000 | 139.2% |
| Wayne County | 693 | 626 | -9.7% | 653 | 540 | -17.3% | $115,000 | $130,500 | 13.5% |
Note: Year-to-date data (including detached single-family homes, condos and townhomes) reflect January through August data.
Source: Indiana Real Estate Markets Report by the Indiana Association of Realtors
Outlook
The IU East Regional Business Confidence Index (IUERBCI) and its sub-indexes, composed from local business operators’ responses to the annual business survey conducted in the region, all declined in 2022 (see Table 4). The IUERBCI decreased by 3.6% to 88.58 points, indicating that businesses in the region had less confidence in doing business in 2022 as compared with the year before. At the same time, its Present Situation sub-index (83.49 points) decreased by 2.6% while its Expectation sub-index (91.44 points) also dropped by 5.1%. Both declines suggest that surveyed businesses in the region experienced a worse year in 2022 than the year before, and that they also have a worse outlook for 2023 than they did for 2022.
Table 4: IU East Regional Business Confidence Index and its sub-indexes
| 2021 | 2022 | 2021 | 2022 | ||
|---|---|---|---|---|---|
| IU East Regional Business Confidence Index value | 91.93 | 88.58 | IU East Regional Business Confidence Index score | 2,222 | 2,141 |
| Annual change | -3.6% | ||||
| Present Situation Index value | 85.69 | 83.49 | Present Situation Index score | 898 | 875 |
| Annual change | -2.6% | ||||
| Expectation Index value | 96.40 | 91.44 | Expectation Index score | 991 | 940 |
| Annual change | -5.1% | ||||
Source: The 2022 East-Central Indiana Business Survey, conducted by IU East Business and Economic Research Center, September-October 2022.
Over half (54.9%) of the surveyed businesses were able to increase their production/business activities in 2022. About 15% were hiring fewer employees than last year and less than one tenth (8.2%) reduced their capital investment. Although more than 85% of the businesses have suffered from an increase in their cost of doing business (51.9% of business owners/managers reported a significant increase of more than 5% in business costs while 33.6% reported a slight increase of less than 5%), only about one-third (34.1%) of them had seen a decline in their profitability.
Looking forward to 2023, 85.6% of the surveyed businesses expect to increase or maintain their current production/business activity. While 61.8% of the businesses anticipate maintaining their current employment level, 6.9% have plans to reduce their number of employees and 31.3% anticipate hiring more employees. More than 90% of the surveyed businesses plan on maintaining (60.3%) or increasing (30.1%) their capital investments. Of the businesses surveyed, 43.9% of the businesses expect to see an increase in their profitability, despite 82.3% of the survey participants anticipating an increase in the cost of doing business.
While a quarter (24.6%) of the surveyed businesses anticipate the same business and economic conditions in 2023, close to half (47%) of them were optimistic and only 28.3% were pessimistic about conditions in 2023.
During the September Federal Open Market Committee (FOMC) meeting, the Federal Reserve’s forecasts3 for the U.S. were:
- Real GDP growth rate median: 0.2% for 2022 and 1.2% for 2023
- Unemployment rate median: 3.8% for 2022 and 4.4% for 2023
- Inflation rate median: 5.4% for 2022 and 2.8% for 2023
The October projection4 of the U.S. real GDP growth by the International Monetary Fund (IMF) for 2022 and 2023 were 1.6% and 1.0%, respectively. Although there was a significant gap of more than 1% in their projections for 2022, the FOMC and IMF had their projections converged for 2023.
On the other hand, the Conference Board (CB) was more aligned with the IMF on the U.S. real GDP growth rates of 1.5% and 0% for 2022 and 2023, respectively.5 After considering persistently high inflation and the Fed’s aggressiveness to bring it down, the CB predicted a recession to occur before the end of 2022.
Summary
Although the impact of COVID-19 on businesses has appeared to weaken gradually, relatively high inflation and the disruption in the supply chain due to various reasons continue to present challenges to business operations in the region. As a result, we project that the unemployment rate for the region will likely swing in a wide range around 3% through 2023.
Notes
- U.S. Bureau of Economic Analysis (BEA) Regional Fact Sheets, (https://apps.bea.gov/regional/bearfacts/).
- Data (not seasonally adjusted) obtained from Local Area Unemployment Statistics (LAUS) from the U.S. Bureau of Labor Statistics, (https://www.stats.indiana.edu/laus/laus_view3.html).
- Federal Open Market Committee, “Summary of economic projections,” September 21, 2022.
- International Monetary Fund, “World economic output: Countering the cost-of-living crisis,” October 2022.
- Conference Board, “Economic forecast for the U.S. economy,” October 12, 2022.
Acknowledgements
The author deeply appreciates the feedback/support from Dr. Litao Zhong and Dean Denise S. Smith of the School of Business and Economics, Indiana University East.
