Associate Professor of Economics and Director, Center for Economic Education, Indiana University, Kokomo
As noted in the international, national, and state economies, the recovery is officially on, the economy is perking upward, and we expect continued growth. However, the Kokomo economy, while improving, is still lagging a bit behind Indiana and the nation.
Kokomo’s economy remains heavily weighted toward manufacturing. Employment in manufacturing industries peaked statewide in May 2000, and while recent losses have been much less than before (with some months even posting gains), employment is still not anywhere close to its peak. So like the rest of the state, individuals and firms in the area remain apprehensive about the economy and what it holds for them personally. While unemployment in the area peaked in 2002 and has since dropped to about 5 percent, those numbers are still up from the pre-recession lows of about 2.5 percent. Many of these job losses will be permanent due to increasing productivity and job losses to overseas.
On the local front, the moves by the Fed to keep the lower interest rates and the incentives offered by the automobile manufacturers have kept auto sales fairly robust. This has protected jobs and production at the DaimlerChrysler plants—an important part of this local economy. In addition, low interest rates have allowed consumers to continue buying homes, refinancing, and making home improvements. This can be seen all over the area in new home construction, building permit numbers, and new building construction (see Figure 1). Help wanted signs are even beginning to appear in store windows. While these may not be the high-dollar manufacturing jobs that the area would like to see, it is at least encouraging to see hiring occurring and firms looking for employees.
Kokomo Metro Area Building Permits
Although the state and local loss of manufacturing jobs is still troubling, we think that the worst of the economic news is behind the region and we are optimistic about 2004. Given the latest productivity numbers, GDP and labor figures, it seems that the national and state economies are poised to grow and this will certainly also be true of the local economy. Unlike last year’s forecast which was rather wishy-washy, this next year is predicted to be much better for the region.
Also in this Issue…
- Outlook for 2004
- The U.S. Economy
- The International Economy
- Financial Forecast
- Corporate Governance and Reporting
- Fort Wayne
- New Albany
- South Bend/Mishawaka and Elkhart/Goshen
- Terre Haute
- Outlook Summary for 2004