Sniffles in the economy show symptoms of the U.S. and Indiana coming down with a bout of recession, potentially between now and around this time next year.
The Goshen News reported that the state could expect some rough times ahead, but nothing near as catastrophic as a decade ago, nothing like the business-closing damage caused by the Great Recession in 2008–09. Economist Phil Powell likened the coming downturn to a head cold versus a traumatic illness.
“Sometimes you catch a cold, right? … In 2008, we had pneumonia. Now we’re probably going to catch a cold,” said Powell, an associate dean for the Indiana University Kelley School of Business at the Indianapolis campus. “You can thank the tariffs for giving us the germs.”
Powell, also an associate economics professor, pointed to the current trade war between the U.S. and China as accelerating a recession period due to the effects of tariffs on manufacturing.
He and economist Michael Hicks at Ball State University, see a collection of signs indicating a recession on the horizon. Signs include unemployment and job creation, manufacturing employment, economic output, notably involving manufactured durable goods, which consists of a large percentage of Indiana’s gross domestic product.
To Hicks, director of Ball State’s Center for Business Research, the latest federal unemployment report signaled economic growth, while still expanding, is slowing as manufacturers put brakes on new jobs.
“The economy is clearly decelerating,” Hicks said in a news release. “Even with constant expansion nationwide, Indiana factory employment peaked in January, and overall employment peaked in March. The Hoosier economy is close to employment levels declining from 2018 levels.”
He responded to the U.S. Labor Department’s release of unemployment data Friday, which showed 130,000 new jobs were created nationwide in August while the unemployment rate stayed flat at 3.7 percent. The number of new jobs was below average from job creation figures from the previous two quarters. And of those 130,000 jobs, about 96,000 were in the private sector, with only about 3,000 positions opening in durable goods manufacturing, the release shows.