Despite ‘elephants in the room,’ numbers looking bright for Region’s economy
Northwest Indiana is on the move! We no longer must seek ways to slow down economic declines as we have in the past. Conversely, “The Region” is well on its way toward continued economic prosperity.
That was the theme of the NW Indiana Futurecast Event in November at the Avalon Manor Banquet Center in Merrillville.
We have several measures of economic prosperity:
- Nominal gross regional product in 2024 at $55.2 billion, up from $36.4 billion in 2020, according to the Bureau of Economic Analysis — a 51% increase!
- Since 2020, the labor force has increased by 24,000 people, and the population has grown by nearly 6,600.
- Unemployment rates have fallen to 4.2% from 5.5% a year ago as most counties’ unit-rates remain at pre-pandemic levels.
- Housing inventory rose by 4.3% between 2023 and 2024.
During the Futurecast Event, speakers from the Indiana Business Research Center, along with Indiana University Northwest researchers, shared their analyses and views on the economy. The news was generally positive.
Timothy Slaper, research director of the Indiana Business Research Center, said the U.S. economy is in good shape and projected to grow at a rate of approximately 2% annually through 2028.
Carol Rogers, director of the IBRC, discussed the state of the workforce in Northwest Indiana and throughout the state. She stated, and I agree, that today’s skills are not necessarily the skills our workforce will need tomorrow. We need to develop educational programs that encourage a love of learning new things to prepare our workforce for an uncertain future.
Our conversation quickly turned to the role of artificial intelligence (AI) in the labor market. There are tremendous changes in the demand for workers, especially in entry-level office-type occupations. Many companies are transitioning toward a greater use of AI, which will result in lower demand for workers replaceable by AI tools.
What can we do about the decrease in worker demand? How shall we address this? Right now, AI tools are not highly creative. These tools cannot create new ideas as well as humans can. If we focus our attention in our schools and workplaces on creativity and continuous learning, we can better offset the negative impact AI will have on the workplace.
Discussing the economy, both regionally and nationally, we must address the elephants in the room: tariffs, prices, housing and AI.
A tariff is a tax on imports from another country. The tax is levied on the importing company. The adverse economic impact can escalate if the other country also imposes a tariff in response. That action might shrink the market faced by the exporter.
Industries along with the labor markets affected would be:
- Manufacturing because of supply chain costs.
- Agriculture because of reciprocal tariffs on exported corn, soybeans, pork, etc.
There are winners, however. The steel industry would see gains due to reduced competition, but that could also result in higher prices on goods that require steel inputs.
The biggest issue with these tariffs is the uncertainty hanging over the marketplace. Think of this uncertainty as a fog. Do we drive quickly on a foggy road or slowly? In NWI and elsewhere, there is a slowdown in the increase in capital expenditure due, in part, to this uncertainty. The big exception is in technology (i.e., AI) and its related infrastructure, such as data centers.
Housing affordability is an issue across the nation. It takes a household income of about $75,000 a year to purchase a median-priced home (approximately $260,000 in Northwest Indiana). NWI is closing the gap on housing affordability with a median household income of about $70,000 a year.
Regarding prices, we often see a disconnect between reported numbers and what people are sensing while shopping personally. The Bureau of Labor Statistics reported an overall inflation rate of 3% over the past year. When the Futurecast audience was asked if they believed that to be true, the overwhelming response was “NO!” (Editor’s note: holiday sales did climb 3.9% compared to 2024, according to Mastercard SpendingPulse data. Adobe Analytics data showed discounts attracted customers.)
Notwithstanding the elephants in the room, Northwest Indiana is on the move relative to the rest of the country, thanks to the Region’s hard-working people. The future indeed looks bright in Northwest Indiana. •
Read more stories from the current issue of Northwest Indiana Business Magazine.
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