Positive economic indicators, mixed with deep concerns over the steel industry, had local business leaders giving widely divergent evaluations of the economy and their industries at a recent meeting of The Times Board of Economists.
There are signs the economy is doing better, but there are also signs that we shouldnt be so hasty, said Micah Pollack, Indiana University Northwest economics professor.
Despite the woes of steel, the national economy continues to hum along, with US GDP increasing at an annualized rate of 3.9 percent in the second quarter and the United States notching 67 straight months of job creation through September.
The Board of Economists gave the national economy an average score of 7 on a 10-point scale, but a significantly lower average score for the regional economy of 6.6.
When the board met in January, it forecast the regional and national economy would be scoring a 6.9 on the 10-point scale within one year.
The steel industry and its troubles was a common theme among board members, and accounted for much of the disparity between their national and regional forecasts.
Berlin Metals owner Roy Berlin said overproduction in China and a strong dollar have led to an import level thats the highest penetration Ive ever seen.
Susan Zlajic, of Arcelor-Mittal, who gave the steel sector and economy overall relatively low marks, said her company is constantly evaluating our footprint and is engaged in planning for asset optimization.
While talk abounds of operational changes, she said Arcelor has no intention of reducing our blast furnace capacity in the United States.
Pollack studies the local economy and publishes the Northwest Indiana Economic Index, which has had kind of a rough year, he said.
It declined the first three months of the year, the first such stretch since the end of the recession. By the end of August the regional index had regained lost ground, Pollack said, but the forecast for growth over the next six months is not particularly optimistic -- perhaps 0.5 to 1 percent.
The US unemployment rate has been 5.1 percent for two months, causing analysts to worry that job growth has stalled. And, factory orders were down 1.7 percent in August, the biggest decline since early this year.
Pollack noted the complexities in unemployment statistics. Despite a relatively low state unemployment rate, average earnings in Indiana are down $2,000 from last year. Thats partly because the number of manufacturing jobs has decreased and service jobs, especially retail, have grown to take their place.
There are a number of bright spots in the local economy, even in some steel-related industries. Automobile manufacturers and its dealers are having a good run, and that increases demand for steel. Residential and commercial construction is relatively strong, and many retail and service sector business people are relatively bullish.
Craig Frendling, a real estate agent with Century 21 Executive Realty, said housing sales are up 8 percent through August this year over last. He also said the average sale price has risen to about $156,000 from a low, at the depth of the recession, of less than $100,000.
Challenges across sectors include growing personnel costs.
Zlajic noted that labor costs, including health care and retirement plans, were $2.1 billion for ArcelorMittal in 2014, and have become a larger portion of the companys expenses than theyve traditionally been.
Berlin said the cost of health insurance was up 9.3 percent when he recently negotiated his companys annual plan.
Every year for the last several years its been about 9 percent, he said. Its insane to think that this could continue.
As increases compound year-to-year, I think its a system waiting for a crash, Berlin said.