Experts Detail NWI Economic Forecast

Experts Detail NWI Economic Forecast

Hundreds of local business owners, managers, leaders and community representatives gathered at Ivy Tech in Valparaiso for the 2016 NWIBRT Business & Economic Outlook recently, where experts from numerous industries shared their opinion about the future of their respective fields over the coming year.

“There are over 300 people here in today’s audience who are committed to making the future of Northwest Indiana the greatest it can be,” said Don Babcock, Director of Economic Development with NIPSCO. “We have some challenges ahead of us, but we have phenomenal assets as well. And our state is moving forward in the right direction.”

Here are some key takeaways and statements from the event’s presenters:

 

Dr. Micah Pollak, Assistant Professor of Economics, School of Business and Economics, Indiana University Northwest

  • “Currently, we’re at about $29.4 billion for the value of NWI’s GMP (Gross Metropolitan Product).”
  • “NWI equals about 8.6% of the value of Indiana’s GDP.”
  • “However, our growth rate is a bit slower than the state overall, and quite a bit slower than the nation overall. NWI’s GDP/GMP is about $16k less per person than the nation overall.”
  • “Going back to 2009, in terms of real GDP, we’ve grown very very slowly. Basically stable. There are two reasons for this:
    • The US economy is becoming more serviced-based, and less goods-producing jobs.
    • The service sector in NWI is fairly low-paying.”
  • “The average pay of service sector jobs is much lower in NWI:
    • $51,445 US
    • $39,879 State
    • $34,174 NWI”
  • “We need to attract construction and manufacturing jobs. And focus on attracting high-paying service jobs. The only way to do this is to continue investing in human capital. Better training and education.”
  • “Forecast for next year is about 1.5% economic growth for the region in 2017.”

 

Steve Skalka, Senior Vice President and Investment Manager, Horizon Bank

  • “Growth has slowed, to about 2% since the Great Recession. But, the good news is that 2% growth is still growth. We think it will remain this way until a future major economic driver comes along.”

 

Ty Warner, Executive Director, Northwestern Indiana Regional Planning Commission

  • “We’re trying to increase mobility in NWI. We’re headed toward a more united region, if we can overcome the challenge of funding.”
  • “NIRPC doesn’t sit on a pile of cash, but we have access to federal funds. Part of the challenge is finding the local funds to match the federal funds. The state of Indiana pitched in as well, and did a phenomenal job in helping find funds.”
  • 2016-2019 Transportation Improvement Program = $1.421 billion
  • At-Grade Crossing Report – “There are a lot of rail crossings in NWI, and we’re working to identify the 15 worst in our region to try to make the biggest impact with improvements.”

 

Dave Holt, Vice President, Conexus Indiana

  • “We are going to have pension problems in the future, which we’re going to have to formulate ways to solve.”
  • “For infrastructure, we’re going to need about a billion dollars more per year for infrastructure improvements. Rep. Soliday has been pressing for that. He is absolutely vital to that debate.
  • “Companies are fleeing other states because they’re being taxed to death. Our state really has a favorable tax climate.”
  • “Labor shortages have spread to unskilled workers – and that’s going to be a major problem.”
  • “Federal policies are hurting manufacturers, and that’s why many of them choose to move to other countries. That has to stop.”

 

Karl Stanley, Vice President of Commercial Operations, NIPSCO

  • “Natural gas pricing has come down from its peak to its historic low. This change occurred more quickly than anyone expected.
  • “We’ve become truly energy independent, and many people don’t realize it.”
  • “Prices of natural gas will remain subdued.”
  • “There will be a shift from coal to gas mix for power generation.”
  • “Crude oil and gasoline prices will remain subdued for at least the near future.”

 

Peter Novak, CEO, Greater Northwest Indiana Association of Realtors (GNIAR)

  • “The number of houses sold has rebounded since 2009-2011.”
  • “Costs of a house in Indiana rank among the cheapest nationwide.”
  • “Home prices are rising, and it’s mostly due to inventory. There aren’t a lot of homes for sale. Current prices are about 9% higher than what they were at our previous peak, before the recession.”
  • “The amount of newly constructed homes being purchased is low.”
  • “Indiana housing permits are slightly higher in 2016 than 2015. Numbers are still well below pre-recession levels. NWI is doing better than statewide averages.”
  • “There’s pent-up demand out there. We have to get builders and sellers off the fence, because our inventory is a little bit low. We need to have more balance in our supply in demand, and we predict we’ll get that balance in the coming years.”

 

Aaron McDermott, Founder/President, Latitude Commercial

  • “We find that retail real estate tends to follow residential real estate quite closely. When we see residential housing starts happening, we tend to see retail sales pop up nearby.”
  • “NW Indiana vacancy rate = 5.4%”
  • “Liquor licensing laws in Indiana are hurting the development of new businesses. It’s simply too expensive and too difficult for many smaller operations to get licenses.”

 

Lori Tubbs, President/Owner, Commercial Advantage Real Estate

  • “In terms of financing projects and bringing in projects that create jobs, the marketing effort has led to more deals getting signed and more coming down the pipe. Many of the local cities are reacting a lot quicker than they have before. The availability of the state representatives has been astounding. There seems to be an ample amount of money available on the state level to bring job-creating companies to the state. On the local level, there can often be a struggle to find money.”
  • “Time is a factor too, and when companies can’t find something quickly, they’re going to look at other states. We’re just trying to assemble more land parcels to allow the inventory to be available when the opportunity comes to bring companies into the region.”
  • “The nice thing about Indiana is that we’re not only good at attracting, we’re good at retaining.”

 

Bill Hanna, President/CEO, Northwest Indiana Regional Development Authority (RDA)

  • “As we move forward over the next ten years, with our strategic plan, we’re making the case for connectivity. Here, we’re very light in commuter transportation options.”
  • “Illinois has done a better job than us in terms of commuter connectivity. Our train line was built 100 years ago. IL has about 500 miles of track, in some places quadrupled. We have one line.”
  • “NWI has had slower population growth than the surrounding area.”
  • “Chicago suburbs have grown about 226%, while NWI’s has grown about 4% with a loss in Lake County. What does that mean? Illinois residents are trying to get out of there, but they’re not heading here.”
  • “West Lake Corridor – we’re now eligible for 50% reimbursement from the federal government.”