KOKOMO – A panel of finance and economics professors discussed the 2017 economic forecast Thursday, admitting to a healthy degree of uncertainty on a national and global level, and modest optimism on a state and regional level.

The panel consisted of three professors within the Kelley School of Business and the dean of Indiana University Kokomo’s business school, and was held in an IUK meeting room to a full audience.

Alan Krabbenhoft, dean of IUK’s School of Business, spoke on a regional level, encompassing the 14-county region that includes Howard County.

When looking at unemployment, Krabbenhoft said there are significant fluctuations, even within a short time frame – saying if someone were to compare the unemployment rate from February 2015 to one year later, they would find a fairly different number if they would do the same thing with September 2015.

Overall, those contrasts are comparable, he said, with the unemployment rate hovering around the economist’s definition of full employment – which can never reach 0 percent.

Within the region, Howard County tends to have one of the higher unemployment rates, Krabbenhoft said, with Carroll, Clinton, Hamilton, Tippecanoe and Tipton counties seeing some of the lowest. On the other end of the spectrum, Grant, Madison and Miami counties usually see the highest.

All in all, though, he said there isn’t too much room for rates to fall, and although job creation in the region was minor in 2016, it wasn’t combatting a devastating employment rate.

With Howard County relying heavily on agriculture and manufacturing, Krabbenhoft said a number of factors determine success rates in either industry.

For agriculture, it’s the weather, which cannot be determined.

“So without the benefit of a Ouija board, the weather patterns are unpredictable,” he said. “We might find that our region or other regions experience very poor growing conditions, while others find them to be ideal.”

Manufacturing in part relies on a global market, as cars produced don’t necessarily stay inside Indiana.

If, in 2017, global economies grow, Krabbenhoft said there could be small gains seen regionally.

Automobile manufacturing is one of Indiana’s stronger industries for output, along with pharmaceuticals – which make up 9 percent of Indiana’s output, said Kyle Anderson, Clinical Assistant Professor of business economics at Indianapolis’s Kelley School of Business.

Economically, Anderson said, Indiana has outperformed the United States’ average.

In 2016, he said Indiana has added 100,000 jobs – with the state near the full employment line. The bad news is that personal income is about 87 percent of the national average, with a large contributor being Indiana’s geographic location, as other states in the “Rust Belt” have seen similar figures.

Another area in need of improvement, he said, is education levels – something that is usually tied to economic growth. Anderson was sure to point out that correlation does not indicate causation, though.

“But there’s a lot of good evidence that says that if you want to improve the state’s fortunes, you really need to drive the education level,” Anderson said.

The 2017 forecast for Indiana’s economy shows growth, he said, assuming that these hiccups are kept in mind.

On a national level, Catherine Bonser-Neal, Associate Professor of Finance in the Kelley School of Business, said the United States is not on track to reach their 2016 prediction of a 2.5 percent economic growth. She used basketball as an analogy.

“We’ve got a team of players on the court, however only one of them is shooting, and that’s been the consumer. So what we really need for further growth is for some of those other players to pick up their game, and in particular in business and investment,” Bonser-Neal said.

She added that consumer investment spending had been strong, but couldn’t keep that pace, but added a bright spot in 2016 was job growth.

For 2017, she commented that the economic predictions were made before the presidential election, and she theatrically crumpled the paper in front of her and threw it, to laughs from the audience. She said that was a joke, calling the coming forecast an oncoming train – meaning it would be hard to change in a short time.

Expect gradual increases to interest rates, she said, adding this is a process that should be seen as “a normalization, and generally a positive view.”

Nationally, she predicted a 2.2 percent increase in economic growth.

Robert Neal, Associate Professor of Finance at Indiana University’s Kelley School of Business, discussed financial markets, and said there’s good news and bad news.

“The good news is the bad news doesn’t look too bad, and the bad news is the good news doesn’t look too good,” Neal said.

He urged caution when making investments, saying a possible “volatile” market should be met with “conservative assets.”

In response to high-risk treasury bonds, he suggested looking at more short-term options.

Neal told the crowd not to be too anxious about volatility, adding that in a in a three-year span, yields are likely to bring one of three results: one year will be negative, another up to 20 percent and the third about 20 percent.

Cody Neuenschwander can be reached at 765-454-8570 or by email at cody@kokomotribune.com

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