Andy Knight, The Herald Bulletin
November 15, 2023
NDERSON — Uncertainties in conflicts abroad coupled with lingering concerns about the possibility of a recession at home will likely temper consumer spending, which could limit local economic growth, a group of panelists said Tuesday.
Speaking during a discussion titled “Futurecast: 2024 Business Outlook” at the Anderson Rotary Club’s monthly meeting, the economists and business leaders said gradually moderating inflation may not be enough to coax buyers into stores early next year.
“Many people are looking at their budgets. They’re making shrewder decisions about finances,” said Mark Frohlich, an associate professor of operations and supply chain management at Indiana University. “One of the big hopes to keep our economy growing next year is for consumers to continue to get out there and do some of the things they started doing really beginning in the third quarter of last year.”
Still, Frohlich said IU’s Kelley School of Business is optimistic in projecting that, after slowing modestly in the first half of 2024, the U.S. economy will regain momentum in the second half of the year.
He said Indiana is wellpositioned to weather a storm of potential economic difficulties, noting that the state is poised to surpass a significant milestone: IU economists are projecting that next year, more than half the state’s population of about 6.8 million people will participate in the workforce in some way.
“Our projection for 2024 is, we’re going to stay out of recession,” Frohlich said. Inflation, he added, should continue its downward trend and sink below 3% by the second half of 2024.
“That won’t mean it’ll be gone,” he said, “but it will be diminishing.”
Madison County, with its reasonable cost of living and lower-than-average median home prices, should continue to present itself as an appealing option for companies to consider locating in. Panelists said the decisions the Federal Reserve makes regarding prime lending rates will continue to influence economic activity locally.
“A crystal ball sure would be helpful knowing what we’re going to do with those Fed rates,” said Lonnie Leeper, dean of the College of Business, Engineering, Science, and Technology at Anderson University. “That’s going to have an impact on what happens next.”
Leeper said he is cautiously optimistic that inflation will continue on a downward trend, but added that consumers will likely remain judicious in their spending.
“They’re still going to be cautious, and they need to be cautious,” Leeper said. “While the (inflation) percentage is going down, prices are still high, and as we’ve seen, we haven’t seen spending decline as a result of that.
“We may not expect prices to go back to that pre-pandemic level, either,” he continued. “That will be a continual issue for consumers as they move forward into 2024.”