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Grant Black, an economics professor at Indiana University South Bend, told a group of local business people that while things are bad now and may get worse in the short term, the recession may end by the third quarter.
As reported by the Goshen News, Black indicated economists expect “sluggish growth” later this year. But before that the economy could slip lower. He said the first half of the year may experience a deeper recession before economic activity picks up in the third quarter.
With regards to Elkhart County, which had an unemployment rate of 12.4% in November that may be the highest in the nation, Black indicated that the county’s industrial strength is also its economic weakness.
Forty-six percent of Elkhart County’s economy is based on manufacturing. And it is manufacturing jobs that are being lost by the thousands in this recession. Black said Elkhart County has lost 5,765 jobs in the past year and Indiana has lost 57,000 jobs.
Economists create categories for jobs and the RV industry falls under transportation equipment. That sub-category of manufacturing accounts for 24% of all the manufacturing jobs in the county. It is also the category that is taking a beating during this recession.
The Goshen News reported that the heavy loss of jobs can be coldly totaled in the unemployment statistics, but are also boosting the social service indexes, which track human misery. Black said that welfare use in Elkhart County increased 9.7%from October 2007 to October 2008. “That’s a huge increase,” he said.
Even more startling is the demand for help with food purchases. Black said there were 9,397 people using food stamps in Elkhart County in October. That was a massive 32.7% increase over the year before.
Elkhart County is experiencing a worse recession right now than the rest of the country because the economic base is so narrow, according to Black. By having almost half of the local economy based on manufacturing makes it more vulnerable, he said.
Black compared the county to the rest of the Midwest region and U.S. He said the region has an economy based on 18% manufacturing and the United States has 10% manufacturing overall.
“When they take a dive, you are really taking a dive,” he said. “You have all your eggs in one basket.”
Once consumer confidence is restored the recreational vehicle industry appears to have a bright future, Black indicated.
He said the current crisis in the RV industry is being caused by consumers not being able to buy. “It’s mainly driven by they can’t get the loans …” he said.
As for the manufactured housing industry in Elkhart County, it has more serious problems and is not likely to recover anytime soon, he predicted.
“That industry is just sluggish and doesn’t have a rosy picture,” he said.
But Elkhart County is noted for being entrepreneurial, Black said.
“That will help it weather this storm,” he said.