Ball State economists predict Indiana's economy will net 47,000 new jobs in 2008

Topic: Miller College of Business

December 5, 2007

Two Ball State University professors anticipate Indiana's economy will rebound in the coming year with a low inflation rate, strong wage growth and near historic low unemployment rate.

Indiana's future looks to be improving in the new year as the state rebounds from two consecutive years of major job losses, said Michael Hicks, director of Ball State's Bureau of Business Research.

Hicks and Gary Santoni, a professor emeritus of economics at Ball State, gave their cautiously optimistic assessment of Indiana's economy during the 12th annual Indiana Economic Outlook luncheon Dec. 4 in the Horizon Convention Center in downtown Muncie. 

"Indiana has suffered a bout of job loss in recent years, but it looks like the more difficult times are past. The state is rebounding due to the strong fundamentals of our economy," Hicks said. "We think the state's economy is going to bounce back after some rocky times."

Ball State's forecast is based on data from the newly released Longitudinal Employer Database produced by the U.S. Census Bureau and Columbia University.

Santoni was similarly upbeat, but noted there is risk in the new forecast due to continued high petroleum prices and lingering concerns over the subprime market fallout.

According to Hicks and Santoni's forecast:

  • Job growth will be respectable with about 47,000 net new jobs by the end of 2008. This growth of 1.6 percent is better than that of recent years but similar to the annual growth Indiana experienced in the later 1990s and early part of this decade. 
  • Wage growth is projected to be at 3.8 percent, but with larger gains concentrated among existing employees. This suggests much of the new job creation will occur in human capital intensive jobs such as financial services and health care where acquired skills translate into higher wages. 
  • The unemployment rate should hover around 4.6 percent in 2008 — the same as the national average — much lower than the average of 5.9 percent from 1960 to 2006.
  • Inflation should be at 2.6 percent next year, which is lower than the 3.8 percent average from 1960 to 2006.
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