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12/26/2018 5:48:00 PM
Indiana University forecasts state's economy will grow by 3.2 percent in 2019

Joseph S. Pete, Times of Northwest Indiana

Indiana University forecasts the state's economy will grow by 3.2 percent next year.

But Associate Professor of Finance Ryan Brewer of Indiana University–Purdue University Columbus cautioned in the Indiana Business Review's 2019 forecast that the party won't last forever.

"Since the inception of America, which began 242 years ago, no economic expansion has lasted longer than 10 years," he wrote. "The longest U.S. expansion lasted from March 1991 to March 2001 and generated annualized real GDP gains of 3.6 percent throughout the period. In contrast, the current ongoing expansion has now lasted over nine years and has, thus far, generated annualized real GDP growth of only 2.2 percent."

The length of the national economic expansion has triggered speculation on how long it can continue to last before the inevitable end of the business cycle, and whether a decline in growth in Indiana will come before, after or at the same time as a national recession.

"While investments have slowed at last count, the effect of previous investment is expected to drive productivity numbers leading into the coming year, adding to strength provided by consumer spending," he wrote. "The economy appears poised to see its strongest growth in the first quarter of 2019, after which growth rates are expected to slow but remain strong through the end of 2019.

"Tailwinds include rising wages and consumer spending strength, as well as potential for further capital investment. Headwinds include uncertainties with international trade, political unknowns, labor shortages and the effects of weaning off of inexpensive credit."

In the coming year, Indiana likely will continue to see across-the-board growth in jobs, gross state product, new businesses formation, wages, and income, Brewer wrote.

"Common to late stages of business cycles, we are seeing stabilizing low unemployment rate numbers, rising wages and rising short-term interest rates as a measure to control inflation. Recent corporate tax cuts have been yielding improved business confidence and expected continued investments. However, even while businesses will yield productivity gains in coming periods, labor tightness in Indiana is an issue that could countervail, or at least attenuate, gains made by business investment."

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Editor, John C. DePrez Jr.; Executive Editor, Carol Rogers; Publishers: IBRC and IAR

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