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Muncie Forecast 2021

Author photo

Director of Research, Center for Business and Economic Research, Ball State University

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Research Assistant, Center for Business and Economic Research, Ball State University

The factor that has had the largest effect on the local economy over the past year was not even on the radar a year ago: People became conscious of the COVID-19 virus during March 2020 and by the end of that month, local schools—including Ball State University and the seven public school districts in the county—had switched to e-learning. Over the next few months, the governor began issuing executive orders that closed nonessential businesses, limited public gathering and required the wearing of face masks and social distancing in public places. Since mid-May, the economy has slowly been reopening and the number of COVID-19 cases in the county and the state have been increasing. At the beginning of November 2020 (when this article was written), more than 3,400 people in the county had tested positive (out of almost 28,500 people tested) and 85 had died of the COVID-19 virus since the beginning of the pandemic.1

Many of the changes in the data discussed in this article stem from the pandemic, which interrupted small gains that had been made over the previous years as the Muncie Metropolitan Statistical Area (MSA) continued to recover from the Great Recession and various structural changes related to dramatic decreases in manufacturing employment over the past several decades. Other trends, such as the decline in retail employment, were further exacerbated by the pandemic.

Highlights from 2020’s business news included the increasing vacancy rate at the Muncie Mall: Macy’s announced that it would close in January, while later in the year a new management company took over, and JC Penney, the last anchor store, announced that it would close along with at least five smaller stores.2 AquaBounty Technologies is expecting to harvest its first crop of genetically engineered salmon during the fourth quarter of 2020 and has begun construction of a processing facility at the farm.3 Exide Technologies, which operates a battery recycling plant in Muncie, was purchased and is expected to continue operations.4

COVID-19-related impacts on local businesses include a dramatic decline in the hospitality industry. The downtown Courtyard by Marriott hotel, for example, reported a 10% occupancy rate during the summer—down from about 70% before the pandemic.5 Ball State University reduced employment by 128 through job cuts and not filling vacant positions.6 Several local businesses benefited from federal Paycheck Protection Program loans of at least $1 million.7 The purpose of the program was to assist with the retention of employees during the economic slowdown caused by the pandemic.

This article includes current data from public sources on various measures of economic activity for the Muncie MSA (Delaware County) to analyze changes over the past year. A summary of the labor market forecast for the Muncie area is included in the conclusion.

Labor markets

The Muncie MSA saw a large increase in its unemployment rate, going from 4.2% in January 2020 to 6.1% in September 2020 (see Table 1). The unemployment rate spiked at 16.3% in April during the COVID-19 shutdown and has decreased since then as the economy opened back up. It is still about 3 percentage points higher than the previous September. The Muncie metro continues to see a higher unemployment rate than the state of Indiana. However, the state of Indiana peaked at a higher unemployment rate in April with an unemployment rate of 17% compared to Muncie’s 16.3%. The Muncie MSA saw more decreases in the already downward trending labor force, with decreases of about 1,600 people between September 2019 and September 2020. This suggests that some people have stopped looking for work or decided not to work during the pandemic. The Muncie metro continues to struggle with a dwindling population, which ultimately affects the labor force and employment. The pandemic adds another barrier.

Table 1: Labor force and unemployment in the Muncie metro

Year Month Labor force Unemployment Unemployment rate
2019 September 53,971 1,703 3.2
October 54,541 1,960 3.6
November 54,732 1,998 3.7
December 54,147 1,845 3.4
2020 January 54,379 2,264 4.2
February 54,905 2,177 4.0
March 52,957 1,997 3.8
April 52,748 8,574 16.3
May 52,374 6,279 12.0
June 52,975 5,928 11.2
July 52,342 4,347 8.3
August 51,346 3,692 7.2
September 52,371 3,203 6.1

Note: Data are not seasonally adjusted.
Source: U.S. Bureau of Labor Statistics

Employment by industry is measured using the January to August average for each year. Muncie continued to see a decline in its nonfarm industry for the third year in a row, with nonfarm employment decreasing by 4.6% from 2019 (see Table 2). Much of this decline was induced by the pandemic. The underlying data show that nonfarm employment peaked in February with 51,300 jobs and reached a low point in May with 45,000 jobs. Nine industries saw decreases in employment, with the largest two being manufacturing (-11.8%) and leisure and hospitality (-9.5%). Manufacturing employment was decreasing even before the pandemic struck. Only three industries saw increases in employment with the largest being financial activities (4.5%) followed by other services (2.0%) and private service-producing—residual (0.5%). The information industry hasn’t seen a change in employment since 2012.

Table 2: Year-to-date Muncie MSA employment

Industry 2016 2017 2018 2019 2020 Change since 2019 Percent Change 2019-2020
Total nonfarm  50,925  51,025  50,300  50,213  47,913 -2,300 -4.6%
Total private  38,400  38,638  38,288  38,563  36,638 -1,925 -5.0%
Goods-producing  5,813  5,788  5,825  5,863  5,400 -463 -7.9%
Manufacturing  4,300  4,300  4,188  4,225  3,725 -500 -11.8%
Private service-providing  32,513  32,850  32,463  32,700  31,238 -1,463 -4.5%
Trade, transportation and utilities  8,975  8,863  8,713  8,650  8,225 -425 -4.9%
Information  300  300  300  300  300 0 0.0%
Financial activities  2,500  2,463  2,288  2,238  2,338 100 4.5%
Private educational and health services  8,538  8,888  9,125  9,388  8,713 -675 -7.2%
Leisure and hospitality  5,425  5,250  5,225  5,500  4,975 -525 -9.5%
Other services  1,800  1,800  1,825  1,863  1,900 38 2.0%
Private service-producing—residual  4,975  5,288  4,988  4,763  4,788 25 0.5%
State government (includes public schools and hospitals)  8,500  8,425  8,138  7,725  7,700 -25 -0.3%

Note: All data are January through August averages.
Source: U.S. Bureau of Labor Statistics and Indiana Department of Workforce Development

The underlying monthly data show that leisure and hospitality and retail were particularly hard hit during the pandemic, with jobs in these sectors decreasing by 1,500 and 1,200, respectively, in April. The leisure and hospitality sector has since recovered, but retail is still about 500 jobs below pre-pandemic levels—in part due to store closings at the Muncie Mall and growing consumer reliance on e-commerce.

The Muncie metro once again saw an increase in its first quarter average weekly wages for the fourth year in a row (see Table 3).8 Total average weekly wages for the first quarter increased from $792 in 2019 to $821 in 2020 (3.7%). Muncie had 14 industries see increases in their average weekly wages, with the largest being finance and insurance (15.4%) followed by construction (9.9%). Only five industries saw lower average weekly wages with the largest by far being real estate, rental and leasing (-11.8%).

Table 3: Average weekly wages in Muncie MSA

Industry 2019 Q1 2020 Q1 Change, 2019-2020 Percent change, 2019-2020
Total $792 $821 $29 3.7%
Management of companies and enterprises $2,456 $2,462 $6 0.2%
Wholesale trade $1,170 $1,147 -$23 -2.0%
Construction $796 $875 $79 9.9%
Public administration $784 $782 -$2 -0.3%
Real estate and rental and leasing $756 $667 -$89 -11.8%
Other services (except public administration) $486 $523 $37 7.6%
Arts, entertainment and recreation $295 $314 $19 6.4%
Accommodation and food services $276 $280 $4 1.4%
Health care and social services $858 $916 $58 6.8%
Manufacturing $1,040 $1,007 -$33 -3.2%
Transportation and warehousing $866 $893 $27 3.1%
Administrative, support, waste management and remediation $678 $666 -$12 -1.8%
Retail trade $502 $534 $32 6.4%
Finance and insurance $1,198 $1,382 $184 15.4%
Professional, scientific and technical services $1,049 $1,110 $61 5.8%
Educational services $973 $994 $21 2.2%
Utilities $2,116 $2,210 $94 4.4%
Information $843 $888 $45 5.3%

Source: U.S. Bureau of Labor Statistics and Indiana Department of Workforce Development

The inflation rate from the first quarter of 2019 to the first quarter of 2020 was 1.9%, a little higher than last year’s inflation rate of 1.2% for the same period. Only two industries— management of companies and enterprises and accommodation and food services—had wage growth lower than the inflation rate—indicating decreases in real wages for these sectors.9

Housing

The Muncie metro saw a total of 69 residential building permits in 2020 (as of August), which was a large increase over reported totals for the past several years (see Table 4). This was driven by a large increase in multifamily permits—a much-publicized, 55-unit apartment building near the White River in downtown Muncie.10 This breaks the two-year streak of having no multifamily permits and is the highest number of multifamily permits recorded since 2004. The number of building permits issued for new single-family homes remains sluggish.

Table 4: Muncie MSA year-to-date residential building permits

Year Total Single-family Multifamily
2004 200 154 46
2005 122 115 7
2006 94 79 15
2007 87 73 14
2008 47 43 4
2009 21 21 0
2010 25 23 2
2011 53 43 10
2012 47 42 5
2013 22 22 0
2014 69 25 44
2015 3 3 0
2016 25 15 10
2017 10 6 4
2018 10 10 0
2019 21 21 0
2020 69 14 55

Note: Each year is based on January through August totals.
Source: U.S. Census Bureau

The Muncie MSA saw another increase in existing residential units sold, with a total of 1,131 between January and September 2020 (see Table 5). This is the highest recorded number of units sold since at least 2006, before the Great Recession. The average days on market remains low at 66. Muncie saw increases in both its average sale price and median sale price. Average sale price increased from $112,045 in 2019 to $128,068 in 2020, and median sale price increased from $91,000 in 2019 to $110,000 in 2020. Each of these indicators suggest that the housing market is tight and experiencing high demand relative to the amount of inventory available.11 These numbers suggest that the housing market may be heating up but not enough to encourage large-scale building of new single-family units.

Table 5: Year-to-date residential real estate sales in Delaware County

2016 2017 2018 2019 2020
Units sold 1,010 904  998  1,075 1,131
Average days on market 86 59  75  67 66
Average sale price $107,086 $106,416 $120,328 $112,045 $128,068
Median sale price $84,550 $90,275 $90,000 $91,000 $110,000

Note: Each year is based on January through September totals.
Source: Mid-Eastern Indiana Association of Realtors (MEIAR)

Social safety net

Delaware County saw a massive increase in food stamps issued over the course of the year—one of the effects of the pandemic. Before the April surge, the number of households receiving food stamps had been decreasing gradually over the past eight years. Total food stamps issued increased by $1,042,615 from September 2019 to September 2020 (see Table 6). The dollar value of food stamps issued increased 60.2% from March to April as Indiana experienced business closings and associated layoffs and state-at-home orders related to the pandemic. The number of households and people receiving food stamps also increased, with the number of households receiving food stamps increasing 16.4% between September 2019 and September 2020. The dollar value of food stamps distributed and the number of recipients has been decreasing since May as the economy opened back up.

Table 6: Food stamp recipients in Delaware County

Date Total food stamps issued Number of households receiving food stamps Number of food stamp recipients Food stamps – average per household Food stamps – average per recipient
September 2019 $1,501,828  6,162  12,715 $244 $118
October 2019 $2,224,353  9,423  18,665 $236 $119
November 2019 $1,688,092  6,633  13,682 $255 $123
December 2019 $1,570,045  6,029  12,448 $260 $126
January 2020 $1,566,182  6,015  12,351 $260 $127
February 2020 $1,615,826  6,098  12,350 $265 $131
March 2020 $1,684,142  6,213  12,654 $271 $133
April 2020 $2,698,101  7,504  15,141 $360 $178
May 2020 $2,877,193  7,903  15,974 $364 $180
June 2020 $2,799,863  7,912  15,920 $354 $176
July 2020 $2,624,652  7,505  14,953 $350 $176
August 2020 $2,545,066  7,198  14,274 $354 $178
September 2020 $2,544,443  7,175  14,251 $355 $179

Source: STATS Indiana, using Family and Social Services Administration data

Outlook

Like most places hit hard by the pandemic and related closures, Muncie is recovering. The unemployment rate spiked in April and has since decreased—but is still almost double the rate of a year ago. Food stamp payments spiked in May and have decreased, although the decrease was barely noticeable in the most recent month with available data. Businesses in the leisure and hospitality sector were especially hard hit and have recovered, while retail continues to see job losses. Prices of existing homes have increased due to limited inventory.

The Indiana University Center for Econometric Model Research’s forecast shows employment growth of 3.9% in the Muncie MSA for 2021 as the county recovers from the pandemic-induced recession. Income is projected to decrease 7.4% during 2021, which suggests that job growth will occur in lower wage sectors.12 Population continues to show a slow decline with a projected 0.2% annual decrease.

Notes

  1. Delaware County EOC COVID-19 Dashboard, www.arcgis.com/apps/opsdashboard/index.html#/f7e2404ca14f431d8d1d499ad5256bfa. The number of positive cases reported on this dashboard are understated because people with mild symptoms or no symptoms are less likely to be tested.
  2. R. Gibson, “50 years of Muncie Mall: A timeline of retail trends and turnover,” The Star Press. Article published Feb. 12, 2020; last modified Oct. 2, 2020.
  3. S. Slabaugh, “Albany fish farm harvesting tons of salmon,” The Star Press, June 30, 2020.
  4. S. Slabaugh, “Muncie Exide plant sold at bankruptcy auction” The Star Press, Aug. 10, 2020.
  5. C. Ohlenkamp, “Pandemic impacts downtown hotel revenue, could affect bond repayments,” The Star Press, Aug. 7, 2020.
  6. S. Slabaugh, “Pandemic prompts Ball State to cut 128 jobs,” The Star Press, Oct. 5, 2020.
  7. S. Slabaugh, “Here’s who got the biggest PPP loans in East Central Indiana,” The Star Press, July 20, 2020.
  8. Data for the second quarter, which would include the months with pandemic-related closures, were not available at the time this article was written, but we expect pandemic-related closures to put downward pressure on wages.
  9. Inflation rate for Midwest region using the CPI for all urban consumers, not seasonally adjusted.
  10. C. Ohlenkamp, “White River Lofts has official groundbreaking in downtown Muncie,” The Star Press, May 29, 2020.
  11. C. Stefanski, “A ‘perfect storm’: Local real estate experiencing demand, low inventory,” The Star Press, July 18, 2020.
  12. Forecasts come from the Indiana University Center for Econometric Model Research (https://ibrc.kelley.iu.edu/analysis/cemr/), October 2020.