99 years of economic insights for Indiana

The IBR is a publication of the Indiana Business Research Center at IU's Kelley School of Business.

Executive Editor, Carol O. Rogers
Managing Editor, Brittany L. Hotchkiss

Columbus Forecast 2015

Assistant Professor of Finance, IU Division of Business, Indiana University–Purdue University Columbus

The good news just keeps pouring out of Columbus, Indiana. An artistic panacea for many ills common to larger city centers, while increasingly packed with a livable portfolio of amenities associated with higher standards of living, Columbus has experienced its fifth consecutive year of growth in 2014. Nominal GDP, employment, labor force and income are among the metrics on track to continued improvement.1 Oh, but there is much more to Columbus than mere economic metrics would reflect: Columbus is home to a diverse, well-educated, proud group of citizens.

As of 2012, the U.S. Bureau of Economic Analysis reported that the Columbus Metropolitan Statistical Area (MSA) had the 25th highest per capita income among the 381 metro areas measured across the United States. Contributing to the relatively high average income, Columbus now serves as the employment base to more mechanical engineers per capita than any other community in the United States.2

Moreover, Columbus boasts the second-highest H-1B visa concentration in the country on a per capita basis.3 Accordingly, the city plays host to an annual ethnic expo wherein several thousand people representing dozens of countries crowd the streets of the city of Columbus and share culture, language, food, dance and conversation all in the spirit of a modern community.4 Representative of this diversity, the Indiana University MBA Program at Indiana University–Purdue University Columbus currently is enjoined by 27 MBA students representing 19 different countries across five continents.5

Consistent with the problem-solving mindset of its citizens, while many communities suffered economic losses throughout the Great Recession, Columbus counterintuitively invested hundreds of millions of dollars into its infrastructure during that time, and the returns on those investments continue to materialize.

Optimism in Columbus remains today as plans for infrastructural expansions continue. Yet,  how long can this local bull market of economic expansion continue? Is such optimism warranted in this small Midwestern manufacturing community, during a time when Indiana has been relaxing its historic focus as a manufacturing hotbed, exchanging this core competency for an emergence of health care and biotechnology strength?

After investing more than $145 million in capital projects over the past seven years, organizations around Columbus continue to plan for expansion and growth for 2015 and beyond. Using content analysis, evidence to support this conclusion can be found in 12 economics-related articles seen over a period of one-month in the local Columbus newspaper, The Republic:

  • A $500,000 infusion is planned for safer pedestrian crosswalks in school zones throught the community.6
  • The Columbus Visitor’s Center plans to establish a satellite office in Hope, Indiana, securing a $40,000 annual cash injection from a local foundation.7
  • Ricker Oil plans to build two convenience stores in the Columbus MSA, for an added 20 total new jobs in the coming year.8
  • Columbus’s Sunright America, North America’s largest manufacturer of metal fasteners, recently completed a $34.6 million expansion of its Columbus facilities, and plans to add 60 jobs over the coming 12 months. Sales at Sunright America are expected to reach $53 million in 2014, a 10.4 percent increase over 2013 sales. Sunright America has also indicated plans for further expansion in 2017.9
  • Kroger Corporation plans to invest $20 million in 2015-2016 for the renovation and construction of a new marketplace superstore in Columbus.10
  • The city of Columbus plans to invest between $3 million and $4.3 million in the Mill Race Park amphitheater.11
  • Between 2013 and 2014, Columbus has hosted 550 regional or national events at local area hotels, generating considerable economic impact for the community.12
  • While details are yet to be agreed upon by various stakeholders, the city of Columbus plans to invest between $1.3 million and $2.8 million to revitalize State Street in Columbus in the coming two years.13
  • The Columbus Municipal Airport (which lands or departs 100 flights per day) plans to upgrade its terminal with a $500,000 renovation project this coming year.14
  • Cummins Inc. increased its 2014 sales projections, arising from a 15 percent third-quarter sales growth over last year’s third quarter. Revenue increased 19 percent in North America, and 10 percent overseas. Cummins also increased its quarterly dividend by 25 percent and repurchased 1.2 million shares of stock. All four business units increased sales in the third quarter of 2014, ranging from 6 percent to 37 percent above the same quarter of 2013. Cummins generated $684 million in earnings before interest and tax (EBIT) during the third quarter of 2014, an increase of $148 million over the same quarter last year.15
  • General Motors launched a new Chevrolet dealer in Columbus in 2014, including the establishment of 32 staff jobs.16
  • Siemens Corporation of Berlin, Germany, has worked with Ivy Tech of Columbus—at the Advanced Center for Manufacturing Excellence—to create the first Siemens Mechatronics Systems Certification training program, through a grant from the Lilly Endowment, Inc. The training made available through this program can unlock the potential to fill approximately 500 currently unfilled skilled labor jobs in the Columbus MSA.17

Measures of Concurrent Economic Vitality

Education and Population: A healthy, growing population reflects an important dimension of a vibrant community. Educational attainment has been shown to be associated with population growth, and Columbus ranks sixth among Indiana’s 92 counties with respect to attainment of baccalaureate education or higher.18

Population growth typically arises from business growth or growth as a bedroom community proximal to a larger business center. Although Columbus is located 40 minutes southeast of Monument Circle in Indianapolis, population growth experienced by Columbus is mainly attributable to strong business and economic conditions. Over the past year, Columbus experienced 51.8 percent higher population growth in 2013 versus the state of Indiana as a whole: the Columbus increase was 0.8 percent while the state of Indiana's was 0.5 percent.19 Moreover, the mixture of diverse groups in Columbus having a higher mean level of education provides an attractive basis for additional business expansion at future dates.

Unemployment: The measured unemployment rate has been under attack by many critics over the five-year period following the Great Recession. Critics have suggested the metric fails to reflect the number of underemployed workers and discouraged unemployed individuals who have given up searching for work and left the labor force. Nonetheless, unemployment can be a good measure of relative economic health across space, if not across time. On both accounts, Columbus has fared well. With a current unemployment rate of 3.8 percent, Columbus has one of the most industrious labor forces anywhere, placing upward wage pressure on employers who seek to expand business in Columbus (see Figure 1).20

Figure 1: Per Capita Personal Income and the Unemployment Rate in the Columbus MSA

figure 1

Source: U.S. Bureau of Economic Analysis and U.S. Bureau of Labor Statistics

Also, the nearby Seymour micropolitan area (micro) compares favorably at 4.1 percent. See Table 1 for a comparison of Columbus alongside selected Indiana metros and micros.

Table 1: Unemployment Rate Comparison for Selected Metros and Micros

Region 2007 2008 2009 2010 2011 2012 2013 September 2014
Columbus 3.2 4.4 10.0 8.3 7.1 5.7 5.2 3.8
Anderson 5.8 6.5 10.3 10.3 9.7 8.9 8.0 5.8
Evansville 4.2 4.9 7.8 7.7 7.3 6.6 6.3 4.6
Kokomo 6.2 7.3 12.6 10.6 9.7 8.4 7.2 5.3
Bloomington 3.5 4.5 6.3 7.3 7.6 6.9 6.1 5.0
Seymour 3.6 5.3 11.4 9.0 8.0 6.5 5.5 4.1
Greensburg 4.2 6.2 11.7 10.3 9.3 7.4 6.1 4.6
North Vernon 4.6 6.7 13.3 10.7 10.4 8.9 7.6 5.4
Indiana 4.3 5.7 9.9 9.2 8.6 7.5 6.9 5.1
United States 4.5 6.0 9.5 9.2 8.8 7.6 7.0 5.7

Note: Data are not seasonally adjusted.
Source: Bureau of Labor Statistics and Indiana Department of Workforce Development

Employment and Labor Force: One telling aspect of the net positive direction Columbus has been experiencing over the past five years is seen through the lens of jobs available to residents of the Columbus MSA. In fact, Columbus area employers provided 51,100 jobs to a local labor force of only 42,482 (see Figure 2).21 This implies that Columbus employers provide a net 8,618 jobs to citizens outside of the Columbus MSA, placing upward demands on discretionary services—and likely upward pressures on new housing options for workers who seek to eliminate their commute by relocating into the Columbus MSA.

Job growth over the past year in the Columbus MSA was measured at 4.1 percent, which ranks 14th out of 363 MSAs across the United States.22

Figure 2: Columbus Area Jobs and Local Labor Force

figure 2

Source: U.S. Bureau of Labor Statistics

Leading Indicators

Leading Indiana Index and Consumer Sentiment: These numbers relate to Indiana and the United States, respectively, yet they also impact Columbus inasmuch as they set a tone for the macroeconomic environment. Since 2009, both of these measures have been increasing, an indicator of continued economic expansion (see Figure 3).

Figure 3: Leading Index for Indiana and Consumer Sentiment

figure 3

Source: Indiana Business Research Center (Leading Index for Indiana) and the University of Michigan (Consumer Sentiment Index)

Yield Curve: The yield curve for U.S. treasuries remains in normal form, while recent news about factory orders increasing has placed pressure on short-term rates to swing up a bit from historically low positions. Short-term rates remained near zero, while 30-year securities were hovering around 3.0 percent as of October 31, 2014.23 Inversion seems unlikely at this point, as inflationary threats remain uncertain.

Local Building Permits and Local Nominal GDP Growth: Thus far, we have seen that all of the news for Columbus has been encouraging. Here is where the first sign of a darkening sky may loom on the horizon. If 2014 Columbus building permits numbers are projected using pro rata interpolation, based upon actual numbers through August, we will see a drop in building permit filings year-over-year. Through August, 157 permits were filed in Bartholomew County.24 This leads to an interpolated 235.5 permits filed through the end of 2014, which would be the first time in five years—since the Great Recession hit—that we see a downturn in building permits in Bartholomew County.

Furthermore, the last time building permits declined year-over-year (filings peaked at 292 in 2005, then dropped to 281 in 2006), this metric was followed by a drop in nominal GDP three years later. In 2009, nominal GDP dropped from a peak metric of $4.3 billion in 2008 to $3.8 billion in 2009. The inference from this discourse is that, while we would not want to sound alarm bells arising from preliminary building permit numbers dropping slightly, there is reason to pause and see how the building permit filing patterns take shape in Bartholomew County over the coming months (see Figure 4).

Figure 4: Nominal GDP and Building Permits in Columbus MSA

Figure 4

Source: U.S. Bureau of Economic Analysis (nominal GDP) and U.S. Census Bureau (building permits)

Columbus Area Stock Index (CASI): The composition of the Columbus economy may be reflected by an index of publicly traded securities relevant to the community. CASI was developed as a tool to keep abreast of the returns performance of securities affecting the local community, and as a tool useful for forecasting local economic conditions. CASI is an economy-size-weighted index, which weights each component by the number of total jobs estimated to be produced and available in the Columbus MSA. Therefore, securities were selected using area employment as the basis for inclusion in the index. Not all sectors in the local economy were considered. Where the economic condition of a sector was estimated to change relative to some other independent sector, then the dependent sector was excluded.

Figure 5 shows a graphic of the Columbus area employment sectors, how they are interrelated, and to what extent each of them plays a role in the health and vitality of the local economy by providing jobs. Weights reflect the percentage of the approximately 21,080 core or base employment jobs available within the Columbus MSA. Support jobs are not included in this analysis. Thus, for instance, of the base jobs in the Columbus MSA, nearly three quarters of them are in manufacturing.

Figure 5: Interrelation of Columbus Area Employment Sectors

figure 5

Source: Indiana University–Purdue University Columbus

Thus, it is estimated that manufacturing, retail, consumer discretionary (e.g., restaurants and hotels; hospitality and tourism), and health care are the core, independent sectors in the Columbus economy. Remaining sectors—including finance, utilities, government, professional services and construction—were estimated to rise and fall according to the performances of the four independent sectors. Once the core sectors were identified, securities were then selected to represent active participation in the local economy. These securities were then weighted according to the estimated number of jobs filled by each organization or group (see Table 2).25

Table 2: Components of Columbus Area Stock Index

Independent Sector Proxy Number of Estimated Employees Percentage Weighting Scaled Weights
Health Care Vanguard ETF 2,100 10.62% 8.08 11.69
Consumer Discretionary Vanguard ETF 3,900 3.94% 3.00 4.34
Manufacturing Cummins 7,457 37.70% 28.68 41.52
Faurecia 1,600 8.09% 6.15 8.91
Honda 1,164 5.88% 4.48 6.48
Ford 1,164 5.88% 4.48 6.48
Toyota 1,935 9.78% 7.44 10.77
Retail Simon 460 2.33% 1.77 2.56
Wal-Mart 780 3.94% 3.00 4.34
Target 260 1.31% 1.00 1.45
Lowe's 260 1.31% 1.00 1.45
TOTALS 21,080 100% 69.08 100.00

Source: Indiana University–Purdue University Columbus

Where no security could be found, such as is the case for health care and consumer discretionary sectors, Vanguard ETFs were selected to approximate local employer return performance. The index was then created looking at weekly adjusted close prices over the 10-year period 2004 through 2014, and compared to the S&P 500 (monthly adjusted close prices), which is a market capitalization value-weighted index.26 The S&P 500 monthly adjusted close hit its low point on February 2, 2009. ^GSPC is an ETF reflecting the S&P 500, and its value on that date was 735.09. On that same date, the CASI was measured at 109.73, whereas the 10-year low was measured at 82.54 on March 2, 2009. Since February 2, 2009, the CASI has returned 29.08 percent compound growth in returns, whereas the S&P 500 has returned only 19.13 percent. However, since November 1, 2010, CASI and the greater S&P 500 have performed equally (see Figure 6).

Figure 6: Columbus Area Stock Index and S&P 500 Performance Comparison

figure 6

Source: Author’s calculations and Yahoo Finance

National and Global Considerations

A primary concern going forward is the effect on the United States economy that the end of quantitative easing (QE) will have. Since September 13, 2012, when the Federal Reserve voted 11-1 in favor of the third round of quantitative easing, equity securities have experienced a two-year bull market without interruption until October 2014, coincident with the end of QE. Over that stretch, the S&P 500 gained 17.4 percent annualized returns while CASI grew at 20.1 percent annually. Importantly, these runs were preceeded by some volatility in the markets throughout the fits and starts of on-again, off-again QE1 and QE2. Therefore, questions remain right now as to how equities will respond to supply and demand of capital in the absence of quantitative easing.

Globally, there have been reports that China is experiencing growth weakness, alongside reports of prevailing weakness in western Europe. Uncertainty abroad seems to be the predominant news feed across the globe.27


The Columbus economic outlook for 2015 is neutral to slightly favorable.

On the positive side: Locally, many stakeholders are planning business expansions, infrastructure improvements, and some have stated modest future hiring in the area. Columbus has begun to develop its tourism program with 600 total annual events and an estimated $30 million in annual economic impact.28 Indiana’s leading index is at a seven-year high (102.2), and national and local stock market indices continue to show strength with impressive market capitalizations—powered locally by Cummins, Toyota, Faurecia, Wal-Mart, Simon, Honda, Ford, Target and Lowe’s. Consumer sentiment is at its highest levels since July 2007. Also, Cummins just raised its forecast for the fourth quarter of 2014 and for all of 2015 on stronger than expected third-quarter 2014 results.

On the negative side, local building permits are trending slightly down for the first time since the Great Recession, quantitative easing has ended, and the national debate regarding the debt ceiling and future discussions on tax policy may resurface given raises in short-term interest rates (which remain down the road for now). Weakness persists in western Europe and southeast Asia, which could affect growth opportunities for Cummins and other local manufacturing firms having global supply chains.

Columbus is positioned to experience another year of economic prosperity in 2015, likely experiencing modest job growth. Columbus stands to continue to attract capital investment and people and retain its share of high-income jobs. Growth in the manufacturing sector can be expected to persist going forward as consumer optimism prevails, stoking demand for durable goods over the coming year. These should buoy the transportation and manufacturing sectors, which solidly drive Columbus forward. However, while domestic markets continue to look strong over the 2015 term, Columbus may need to wait for any significant job expansions as markets in Europe and Asia experience volatility and challenges.


  1. Data were taken from STATS Indiana’s USA Counties on Profile, accessed October 18, 2014.
  2. Joshua Wright, “Manufacturing Boom and Bust; The Case for Columbus, Indiana.” EMSI. November 15, 2012, www.economicmodeling.com/2012/11/15/manufacturing-boom-bust-the-case-of-columbus-indiana/.
  3. N. Ruiz, J. Wilson and S. Choudhury, “The Search for Skills: Demand for H-1B Immigrant Workers in U.S. Metropolitan Areas,” Brookings Institution, July 18, 2012, www.brookings.edu/research/reports/2012/07/18-h1b-visas-labor-immigration#overview.
  4. Mark Webber, “Drumroll, Please; Images from Last Week’s Ethnic Expo,” The Republic, print edition, October 18, 2014.
  5. Indiana University–Purdue University Columbus, IU MBA Program at IUPUC, 2014.
  6. Chris Jones, “Safer Crossings,” The Republic, print edition, October 14, 2014
  7. Mark Webber, “Visitors Center Will Establish Office in Hope,” The Republic, print edition, October 14, 2014.
  8. Chris Jones, “Indiana Company Plans 2 Area Convenience Stores; About 20 Jobs Expected,” The Republic, print edition, October 14, 2014.
  9. Mark Webber, “Fasten-ating; Expansion Makes Sunright Auto Industry Leader,” The Republic, print edition, October 18, 2014.
  10. Megan Banta, “Council Approves Abatement for Kroger,” The Republic, print edition, October 24, 2014
  11. Chris Jones, “Mill Race Facelift,” The Republic, print edition, October 29, 2014.
  12. Jenny Elig, “Convention Business Looking Up,” The Republic, print edition, October 27, 2014.
  13. Megan Banta, “State Street Revitalization Plan Shelved,” The Republic, print edition, October 26, 2014.
  14. Chris Jones, “Airport Terminal Renovation Almost Ready to Take Off,” The Republic, print edition, October 20, 2014.
  15. Kirk Johannesen, “Cummins Posts Strong 3rd Quarter,” The Republic, print edition, October 29, 2014.
  16. Julie McClure, “Revving Up Columbus,” The Republic, print edition, October 30, 2014.
  17. Michelle Sokol, “Matching Skills + Jobs on the Line, The Republic, print edition, October 31, 2014.
  18. Ryan M. Brewer, “Columbus Forecast 2014,” Indiana Business Review, Winter 2013, www.ibrc.indiana.edu/ibr/2013/outlook/columbus.html.
  19. Data were taken from STATS Indiana’s USA Counties on Profile, accessed October 18, 2014.
  20. Data were taken from STATS Indiana’s USA Counties on Profile, accessed October 30, 2014.
  21. In this context, “local labor force” is used interchangeably and synonymously with “local and employed.” Data were taken from the U.S. Bureau of Economic Analysis Regional Data, accessed October 19, 2014.
  22. “Job Growth by Metropolitan Area,” Department of Numbers, www.deptofnumbers.com/employment/metros/, accessed October 22, 2014.
  23. “Resource Center: Treasury Yield Curve,” U.S. Department of the Treasury, www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/Historic-Yield-Data-Visualization.aspx, accessed October 31, 2014.
  24. Data were taken from STATS Indiana’s USA Counties on Profile, accessed October 18, 2014.
  25. Employment information for local employers was retrieved from STATS Indiana and the Columbus Chamber of Commerce at http://columbusarea.chambermaster.com/list/ on October 31, 2014.
  26. Weekly adjusted close prices were retrieved from www.yahoo.com/finance on October 31, 2014. Adjustments include stock splits and dividends over the period.
  27. News releases taken from Yahoo.com at http://finance.yahoo.com/economic-policy-news/ on October 31, 2014.
  28. Jim Dietz, Sports Tourism Director of the Columbus Visitor’s Center.