- Associated Press - Thursday, November 5, 2015

INDIANAPOLIS (AP) - Indiana’s economy will grow at a slightly faster rate next year and into 2017 even as the state faces challenges from weakening international markets, Indiana University economists said Thursday in their annual forecast.

The panel from IU’s Kelley School of Business offered a gloomier national forecast, predicting that next year the U.S. economy is unlikely to break out of its “post-recession 2 percent slog.”

“Looking to the year ahead, we see little reason for any real optimism,” said Bill Witte, associate professor emeritus of economics.

Witte and his fellow IU economists said they expect real U.S. output growth in 2016 will average about 2.5 percent, which will be a slightly better than this year, but only equal to 2014.

The panel’s pessimism is based on U.S. output in the third quarter of an annual rate of just 1.5 percent, or less than half the rate in the prior three-month period.

The national labor market has also been growing by an average of 167,000 jobs each month, barely half the rate at the end of 2014, the Indianapolis Business Journal reported (https://bit.ly/1NfDCrV ).

Indiana has trailed the nation in gross domestic product growth during three of the past four years. But the state’s GDP will grow at a slightly faster rate into 2017 in part because of Indiana’s status as a big manufacturing state, said Timothy Slaper, research director of the Indiana Business Research Center.

“Given Indiana’s status as a manufacturing powerhouse, its GDP could be boosted by strong demand for industrial machinery and automobiles,” he said.

Indiana’s unemployment rate fell to an estimated 4.5 percent in September. But Slaper said it’s expected to continue dropping until it’s significantly below the “go-go” times of July 2007, when it fell to 4.5 percent.

China’s economic slowdown has affected economic growth in other emerging economies, and instability of its currency has severely affected U.S. exports.

Weakening international markets could lead to declining sales and possible cutbacks at major central Indiana manufacturers, said James Smith, an IU senior lecturer in finance.

That trend is already starting to be seen. In late October, Columbus-based engine maker Cummins Inc. announced it will cut 2,000 salaried jobs worldwide in the coming months because of slack global demand.


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