Muncie forecast 2022

Dagney Faulk, Ph.D.

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

Sean Weiss

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

The COVID-19 pandemic continued to impact the local economy. The number of new COVID-19 cases decreased dramatically during the spring and summer as vaccines became widely available, only to spike again late summer and into the fall as the delta variant gained a foothold in the region. At the beginning of November 2021, when this article was written, over 15,000 people in the county had tested positive (out of more than 231,000 tests administered) and 268 people had died of the COVID-19 virus since the beginning of the pandemic.¹ For comparison, at the beginning of November 2020, just over 3,400 people in the county had tested positive (out of almost 28,500 people tested) and 85 had died of COVID-19.

Many of the changes in the data discussed in this article can be tied to economic forces unleashed by the pandemic and the related government responses. The pandemic interrupted small gains that had been made in previous years as the Muncie metro recovered from the Great Recession and various structural changes to the local economy related to dramatic decreases in manufacturing employment over the past several decades. Other trends, such as the decline in retail employment, continue even as the economy recovers.

Highlights from 2021’s business news included new businesses moving into several vacant sites around Muncie. Right Drive (a company that sells pre-owned vehicles) is scheduled to open at the former Hubler Ford lot, and North Central Industries (a local company that imports fireworks) is rehabbing a former tool and die facility near downtown into a warehouse and distribution facility.² A Gillman Home Center store (hardware and building materials) is planned at the southside site of the recently demolished Red Roof Inn.³ A large, multifamily housing development is planned for a former Marsh supermarket site in southeast Muncie.⁴ In addition, the CanPack Group (a manufacturer of aluminum beverage cans) recently began construction of a facility expecting to employ over 300 workers in the southside industrial park.⁵ Muncie Power Products has purchased the former Brevini Wind facility near I-69 to expand operations.⁶

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 metro saw a large decrease in its unemployment rate as the labor market continued to open after the pandemic-related shutdowns that began in March 2020. The local unemployment rate fell from 6.1% in September 2020 to 3.8% in September 2021 (see Table 1). Along with the unemployment rate, total unemployment saw a similar decrease—going from 3,250 in September 2020 to 2,015 in September 2021 (a 38% decline). The labor force saw a very slight increase—going from 52,889 to 52,917 (+0.1%) over this same period. With a stagnant labor force and decreasing unemployment, we can see that people who continued looking for jobs are starting to return to work. The numbers for Indiana as a whole are similar, with a very slight decrease in the labor force (0.1%) over this period, decreasing unemployment (a 42% drop) and a lower unemployment rate (by 2.5 percentage points). The Muncie metro, along with the state as a whole, continue to see lower labor force participation and employment than pre-pandemic levels.

Employment by industry is measured using the January-to-August average for each year. Total nonfarm employment saw its fourth year of continuous decline for the Muncie metro, falling 0.9% (-438 jobs) from 2020 (see Table 2). The Muncie metro saw decreases in eight industries, with the two largest being manufacturing (-8.7%) and financial activities (-6.4%). Four industries saw increases in employment—the largest was private educational and health services (6.2%). Leisure and hospitality saw a small increase in jobs and is still below the pre-pandemic level of employment. Job losses continue in retail trade (not shown), which came in at 5,625 jobs—a decrease of 200 from the previous year. “Help wanted” signs are abundant across a variety of industries, and employment would likely be substantially higher if more of the open jobs were filled.

Average weekly wages for the first quarter continued to increase in nominal terms for the fifth year in a row. Average weekly wages increased by 1.5% since 2020, coming in at $833 per week (see Table 3). Fourteen industries experienced wage increases, with the largest being arts, entertainment and recreation (18.5%) followed by accommodation and food services (11.1%). Five industries saw a decrease in average weekly wages with the largest being educational services (8.0%) and professional, scientific and technical services (6.7%).

Using the Midwest consumer price index, the inflation rate from the first quarter of 2020 to the first quarter of 2021 was 1.95%, which is higher than the 2018 and 2019 inflation rates of 1.23% and 1.87%, respectively. Overall, nine of the 18 industries had wage growth lower than the inflation rate and, therefore, experienced real wage decreases.

Housing

According to census data, the Muncie metro saw a total of 18 residential building permits issued through August 2021, all of which came from single-family permits (see Table 4). This low number may be due in part to survey response issues. The Muncie area had no multifamily permits during three of the past five years. The number of residential building permits continues to be low when compared to the number issued before the Great Recession.

In terms of home sales, the Muncie metro saw another increase in existing residential single-family units sold—totaling 1,047 between January and September 2021 (see Table 5). The average number of days on market is at an all-time low of 26 days. The region saw increases in both its average sale price and median sale price. Average sale price increased from $132,750 in 2020 to $151,257 in 2021; meanwhile, the median sale price increased from $116,300 to $125,100 over the same period. Each of these indicators suggest that the housing market is tight—experiencing high demand relative to the amount of inventory available. These numbers suggest that the housing market may be heating up, but the low number of building permits suggest that increasing prices are not yet enough to encourage large-scale building of new single-family units.

Social safety net

By late summer 2020, it looked like food stamp payments were starting to decrease, but since September 2020, Muncie metro has seen a steady increase in food stamps issued (see Table 6). This trend continued even as the economy recovered from pandemic-related closings and the unemployment rate decreased. From September 2020 to September 2021 the total dollar amount of food stamps issued increased from $2.54 million to $3.32 million (30.6%). The number of households receiving food stamps and the total number of food stamp recipients has decreased slightly over the year—by 2.3% and 1.3%, respectively.

Outlook

Muncie is recovering. The unemployment rate decreased dramatically, but the labor force remains lower than the pre-pandemic level, and there has been a small decline in total nonfarm employment. Food stamp payments continued to increase throughout the year, and the increase in average weekly wages did not keep up with inflation. Prices of existing homes have increased due to limited inventory. Leisure and hospitality employment has stabilized, while retail continues to see job losses.

The Indiana University Center for Econometric Model Research’s forecast shows employment growth of 2.2% in the Muncie MSA for 2022 as the county recovers from the pandemic. Income is projected to increase 0.3% during 2022, suggesting that job growth will occur in lower wage sectors.⁷ Population continues to show a slow decline with a projected 0.5% annual decrease.