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New federal data show that Michianas economy grew overall in 2014, but -- once again -- a majority of that growth took place in Elkhart County.
The five-county region produced $36.4 billion in economic output in 2014, according to the latest Bureau of Economic Analysis report on gross domestic product in metropolitan areas. That was up from $35 billion in 2013.
The regional economy is good, not great, 1st Source Bank President Jim Seitz said.
He explained that manufacturers, particularly those related to Elkhart Countys recreation vehicle industry, are prospering. Other manufacturers that support the auto and orthopedic industries are growing, too. And he added that people who work in the building trades have been busy keeping up with construction projects at the University of Notre Dame and multifamily housing complexes in the region.
We continue to make things here. We just need a little bit more, Seitz said. We would certainly like the economy to be more robust.
The GDP numbers for individual areas within the region reflect Elkhart Countys surge in manufacturing as well as other counties slow growth. GDP measures the value of goods and services produced in a place and includes everything from spending on construction, health care and entertainment to the price of manufactured items and financial services.
o The South Bend-Mishawaka area, which the federal government defines as St. Joseph County, Ind., and Cass County, Mich., is still Michianas largest economy. The area produced about $13.3 billion in GDP in 2014, up from $13 billion in 2013.
o The Elkhart-Goshen area, however, is on pace to become the regions largest economy. The area, which includes all of Elkhart County, generated about $13 billion in GDP in 2014. That was up from $12.2 billion the prior year, and most of that increase was due to manufacturing.
o Berrien County, which the federal report calls the Niles-Benton Harbor area, produced $6.3 billion in GDP in 2014 -- a slight increase from $6.1 billion in 2013.
o The Michigan City-LaPorte area, which covers the entirety of LaPorte County, produced $3.8 billion in GDP in 2014. That number was mostly unchanged from the previous year.
While the South Bend-Mishawaka area has shown slow growth in its recovery from the Great Recession, there are several major projects that should boost the areas GDP numbers for 2015 and in coming years.
For example, AM General in Mishawaka has announced several contracts to make military vehicles as well as a new partnership with Mercedes-Benz since the beginning of this year.
Also on the manufacturing front, Nello Corp. -- a company that makes steel towers for wireless communications -- is building a $60 million factory on South Bends southwest side. Another longtime South Bend manufacturer, General Sheet Metal Works, has broken ground on a $22.7 million plant northwest of South Bend International Airport. The ethanol plant on South Bends southwest side also resumed production earlier this year after Noble Americas invested almost $100 million to refurbish the facility.
Notre Dame, in association with General Electric and other partners, is building a $36 million turbomachinery facility at Ignition Park south of downtown South Bend, and a cluster of logistics firms is spending at least $31 million to build new distribution centers in AmeriPlex at Interstate 80/90 on South Bends northwest side.
Also, as 1st Source Banks Seitz mentioned, there is hundreds of millions of dollars worth of construction under way at Notre Dame, in downtown South Bend and on Mishawakas north side.
Thats going to have a considerable impact on the GDP of our region, said Scott Ford, executive director of the South Bend Department of Community Investment, but it may be another year or two before those numbers are reflected in GDP.
Elkhart County was a high-profile victim of the Great Recession, as RV purchases tanked when the economy crashed. The county has roared back on the strength of the RV industrys rebound, but business leaders are working to diversify the mix of companies there as well.
Chris Stager, vice president of retention and expansion at the Economic Development Corp. of Elkhart County, said the county has seen different types of manufacturers in food processing, packaging, the aerospace industry and electronics expand in the past few years.
We want to strongly support our RV industry, because they are carrying a lot of weight, Stager said. However, we are seeing diversification. We are seeing more companies not related to the RV industry expanding.
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Energy is Wyoming's big economic driver, but as time goes by, state legislators and Governor Mead hope technology will become a bigger contributor. Tech giants like Microsoft and Underwriters Laboratories have already made moves to Wyoming, creating big job opportunities for Wyoming graduates.
Thomas Johnson, Wyoming Business Council's Chief Performance Officer said "We want to keep that workforce in the state. Those are good paying jobs, those are high value jobs. We think recruiting those kinds of companies, the Microsofts, the Underwriter Laboratories of the world to Wyoming will help keep those young kids in the state.
Technology executives have been attracted to Wyoming, largely because of infrastructure. Wyomings constitution prevents state money from being given directly to companies, so Business Council executives give grants to cities and counties to build infrastructure, leasing the building to a private company. One of the biggest successes is the Wyoming Technology Business Center or Incubator Building; located in Casper.
"So the idea is take early stage companies in the technology sector, incubate them in this building in Casper, in a couple years have them graduate out, grow and create jobs," said Johnson.
Companies in the incubator building like Black Bison Water Services have office space in a centrally located Wyoming city and are given guidance by Wyoming business counselors to help them get their feet on the ground.
Justin Haigler, Black Bison Water Services President said "The business of the incubation process itself has been tremendous for us. Weve learned a lot and grown from our interactions with them and theyre here to help when we need them."
But while state legislators like Representative Tom Lockhart work to diversify the economy, he doesnt want to forget Wyoming's economic foundation, energy.
"All of those things are going to be part of our future and we dont want to forget them as we look for other things to diversify," said Representative Lockhart.
Most recently, Microsoft planned to invest another 208 million dollars over the next three years, creating 25 new jobs in Laramie County. 18 of those jobs will pay higher than the countys median wage.
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THE term currency wars has sparked a vigorous debate within the economics commentariat. The term was coined by Brazils then finance minister, Guido Mantega, in 2010 when the real was moving sharply higher, a nice irony given the reals recent falls to record lows. Some saw it as a negative development, talking of beggar-thy-neighbour devaluations designed to grab a bigger share of world trade; eventually, this was a zero sum game since all currencies cannot devalue. The counter-argument was that, on the contrary, this was positive for the world economy. Countries were easing monetary policy, either by cutting interest rates or adopting quantitative easing, and the aggregate effect would be to boost global demand. Parallels were drawn with the 1930s when developed countries abandoned the gold standard and those that devalued first, recovered most quickly.
A new (privately circulated, so no link) note from Stephen King, the senior economic adviser at HSBC, argues that the 1930s parallel is incorrect and that, currently
attempts by individual central banks to boost growth and inflation via currency depreciation have been collectively self-defeating
The key difference, in Mr Kings view is that
In the 1930s, currency declines weren't just simple devaluations. They represented, instead, a seismic change in monetary regimes. The gold standard was abandoned. The anchor that had kept inflation low disappeared overnight. Inflationary expectations were destabilised. In the US, President Roosevelt made it clear that he wanted the price level - at least for commodities - to return to where it had been before the onset of early-1930s deflation.
Put another way, currency devaluations weren't just 'beggar-thy-neighbour' policies: they also helped raise inflation expectations. By implication, real interest rates fell, the burden on debtors was lifted, bankruptcies declined, lending revived and economies recovered.
King looks at nine countries that went off the gold standard in the 1930s; the average inflation rate in the five years before devaluation was -5.4% (ie, deflation). The average inflation rate in the subsequent five years was +5.7%. Australia and Canada, two commodity producers, were the only ones to get stuck in the deflation trap. but the modern round of depreciations, in the UK, euro zone and Japan have had nothing like the same effect; countries are still struggling to generate any kind of inflation. And, of course, without inflation, the nominal burden of high debt levels remains in place.
Nor have devaluations done much to stimulate economic growth. Mr King points out that, in the three years since Shinzo Abe took power in Japan (ushering in Abenomics which involved quantitative easing and a decline in the yen), Japanese growth has averaged 0.8%. That is not better than in the pre-Abe period. The ECB was the latest big central bank to step up its monetary stimulus; this month it cut its growth forecasts for 2016 and 2017.In every year since 2010, world growth has disappointed relative to economic forecasts at the start of the year, by an average of 0.9 percentage points. In the last four years, the BRICs countries (Brazil, Russia, India and China) have also produced growth lower than forecast, by an average of 1.4 percentage points.
So why hasnt it worked? Mr King says that loose monetary policy has failed to stimulate the domestic economy but has given countries a brief export boost. This has allowed companies to remain in business, that might otherwise have gone bust.
That, however, is not much more than a case of robbing Peter to pay Paul - and it leaves the world still suffering from excess capacity, thereby reducing the chances of a sustained increase in capital spending
So Mr King falls into the beggar-thy-neighbour camp, arguing that
In the absence of a major monetary revolution, big movements in currencies are more likely simply to redistribute deflationary pain than create decent economic growth, particularly if nominal interest rates are already at the zero rate bound. Greater policy-induced currency uncertainty may also contribute to unusually weak world trade growth, consistent with the post-financial crisis experience.
Rather than pursue devaluation, Mr King argues that countries should try to improve their productivity records, which have been poor. But that implies pushing through the kind of economic reforms that special interests (and many voters) dislike. Devaluation is the more tempting, and easier, option.
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Muslim or not, If you want to succeed in the global economy you must be involved in the Islamic economy. Islamic economies are among the fastest-developing markets in the world, with a 1.7 billion population growing at twice the rate of the global population, and there is no question the many opportunities the Islamic economy presents will be important contributors to world economic growth in the coming decades, a fact recognized by an increasing number of governments and corporates across the world.
There are many factors that point to a bright future for the global Islamic economy. Large, young and fast-growing global Muslim demographics is one of them; according to Pew Research Center, the worlds Muslim population is expected to rise to 2.2 billion by 2030, when 29% of the global population aged 15-29 will be Muslim; expansion in intra-OIC trade; rapid growth emerging markets in Asia and slow US and European economies, all mean the global economy is shifting from Western-centric growth to emerging market-centric growth.
In addition, 10 out of the 25 largest growth economies are Muslim-majority countries and the 57 Organization of Islamic Cooperation (OIC) countries represent more than $6.7 trillion of GDP. And, while growth in conventional economies is forecast to average 3.6% between 2015 and 2020, the economies of the OIC countries are projected to grow at a robust 5.4%, according to the International Monetary Fund.
It is these realities that prompted His Highness Sheikh Mohammed bin Rashid Al Maktoum, UAE Vice President and Prime Minister and Ruler of Dubai, to announce his vision, in 2013, to make Dubai the capital of the Islamic economy. Since then, every sector of the Islamic economy has seen strong growth, with the global Islamic economy projected to reach $3.75 trillion by 2020, according to the State of the Global Islamic Economy Report 2014-15. So, whether it is Islamic finance, halal products and services, fashion and cosmetics, travel and tourism, media and recreation, or pharmaceuticals, it is clear the Islamic economy is fast approaching a tipping point.
The growth of the Islamic Economy will be given a further significant boost in October, when Dubai hosts the Global Islamic Economy Summit (GIES) 2015. The conference will bring together over 2,000 policymakers, thinkers and business leaders to build a roadmap for capitalizing on the opportunities within the global Islamic economy. Organized by the Dubai Islamic Economy Development Center and the Dubai Chamber, in partnership with Thomson Reuters, the GIES will offer insights into the trends that are emerging in the global Islamic economy and inform business leaders and practitioners with real world success stories, across sectors, that they can build upon, as they seek to capture the demand from Muslims and non-Muslims for products and services that reflect the values inherent in Islam.
Dubais holistic approach to the development of the Islamic economy recognizes the interdependency of the different pillars that make up the Islamic economy. The GIES will build on this approach by exploring the synergies between, for example, Islamic finance and the Halal and lifestyle sectors. It will also facilitate engagement with key policymakers and business and thought leaders, who are actively shaping the Islamic economy, in order to identify the emerging opportunities that will fuel future growth, thus marking a change in focus from what the Islamic economy is, to how it can benefit everyone.
As the Islamic economy assumes greater importance, entrepreneurs and established businesses are shifting their own focus from establishing a business case to executing innovative strategies that build on successful business models. At the same time, the walls of the silos, that previously separated the various sectors that constitute the Islamic economy, are being broken down. As a result of the new collaborations and partnerships that are being born, the true potential of the Islamic economy is inexorably being unlocked.
Events, such as the GIES, that explore growth ideas, share experiences and knowledge and identify innovative solutions to the challenges the Islamic economy faces, are just one example of how Dubai is seeking to work with global partners to develop and embrace the complete concept of the Islamic economy. It is a huge responsibility but also a great opportunity to create a better, more equitable and sustainable world, for Muslims and non-Muslims alike.
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CASPER - State officials defended the practice of using taxpayer funds to recruit and grow businesses during a legislative review of Wyomings economic development programs.
Wyoming Business Council CEO Shawn Reese told lawmakers Wednesday that the current downturn in the states energy sector underscores the need for the work.
With the economic circumstances that we face, economic development is as important as it has ever been, he said. And I think this is the time when we redouble our efforts.
His comments came during the Legislatures Economic Development Subcommittee meeting in Casper. The seven-member group is in its second year of a review of the states role in providing aid and assistance for economic development programs.
The Business Ready Community Program, which takes up more than half of the Business Councils total standard budget, is under the most scrutiny.
The program provides loans and grants for infrastructure projects, such as water and sewer hookups or helping set up a business park, that are used to incentivize companies to relocate here or expand their existing operations.
Since the program was created in 2004, the state has awarded about 318 million to 315 projects throughout the state.
Reese told the lawmakers that these projects have directly created or are projected to create at least 4,288 jobs.
Most lawmakers have generally been supportive of the Business Ready Community Program and have consistently approved requests to add funds to the program. But there have been some concerns through the years about its effectiveness and fairness.
Sen. Bruce Burns, R-Sheridan, who co-chairs the subcommittee, said hes not sure if the Business Councils work is living up its original goal of diversifying the states economy.
The idea of the Business Council was to go out and diversify the Wyoming economy and build up other businesses so we are not so reliant on the mineral industry, he said. Now its 18 years later ... and from that point of view, I dont know how successful we can say weve been.
Reese responded by saying that many of the economic development projects have targeted non-energy industries, such as the data center projects in Laramie County and other parts of the state.
I would argue diversification is woven through the entire approach, he said.
Reese added that the Business Council is working on a new method to evaluate the return on investment from each program that it runs. He said this will give policymakers and taxpayers a more objective look at how beneficial the projects have been.
Other lawmakers, meanwhile, questioned whether some industries and parts of the state are benefiting more from the government assistance than others.
Laramie County, for example, has received more Business Ready Community funds than any other county in the state.
But Business Council officials pointed out that Laramie County doesnt even rank among the six top counties for funding on a per capita basis. They also said the proximity to major interstate highways, the effectiveness of local economic development groups and population sizes are some of the main factors that drive where a project will be.
Reese also responded to concerns that providing a grant or loan that helps one company could hurt another company.
He said there is communication throughout the state to make sure they are not doing something that inadvertently hurts another company.
We are very sensitive to this topic, he said. (Our goal) is to do no harm.
Maureen Bader with the Wyoming Liberty Group, however, said these types of government assistance programs are harming the economy by discouraging true free-market competition.
What would play well with voters is to get rid of corporate welfare, she said during the public comment period. The more subsidies the government provides to private businesses, the more the markets profit-and-loss signals are weakened, and the more that Americas tradition of entrepreneurship and risk taking by the private sector is undermined.
The Economic Development Subcommittee is expected to issue a report by Oct. 30 outlining any proposed legislative changes for the Business Council. Those recommendations will be forwarded to the Joint Appropriations Committee and the Joint Minerals, Business and Economic Development Interim Committee to consider prior to the 2016 legislative session.
Published on: Thursday, Oct 01, 2015 - 08:23:49 pm MDT