Gross domestic product (GDP) in Columbus is growing for a seventh consecutive year, though the rate of expansion over the past three years has been less than the expansion seen across the rest of Indiana taken together. Indicators relevant to the local economy suggest further economic expansion is unlikely, yet Columbus is poised to continue at or near full employment. It also has the lowest unemployment rate and best average wages relative to its peers.
Some of the metrics on track to continued strength in 2017 include GDP, employment, labor force and wages. (1) Also, per capita income in 2014 (the latest data available at the time of this article's writing) was up 2.6 percent in the Columbus Metropolitan Statistical Area (MSA), which consists of Bartholomew County. (2) However, the Columbus Area Stock Index (CASI) has experienced volatility recently--down more than 10 percent in the last two years. Cummins forecasts continue to show weakness, the automotive sector may be nearing the end of its expansion, and local building permits and tightened labor markets suggest growth into 2017 will be challenging.
Measures of concurrent economic vitality
Unemployment: With a current unemployment rate of just above 3 percent, Columbus has one of the most industrious labor forces anywhere in Indiana and the United States, placing upward wage pressure on employers who seek to expand business in Columbus. Businesses around the Columbus metro are now struggling with a deficit of available employees during the holiday retail season, when employment opportunities for service jobs tend to peak. Local area weekly wages have risen by about 25 percent over the past seven years, from roughly $800 in 2009 to over $1,000 in 2016 (see Figure 1).
While unemployment rates across America and Indiana have continued to trend downward over the past year, the rate for Columbus continues to reflect the least slack relative to comparison regions. Furthermore, the rate has stabilized across most regions analyzed. See Table 1 for unemployment rates among selected Indiana metros and micros.
Employment and labor force: One telling aspect of the net positive growth Columbus has been experiencing over the past seven years is seen through the lens of jobs available to residents of the Columbus MSA. During this time, Columbus has produced about 12,000 jobs. In September 2016, Columbus-area employers provided 53,200 jobs to a local labor force of 45,114 (see Figure 2). (3) These numbers are up from 52,100 and 43,700 in September 2015, respectively. This implies that Columbus employers provide a net 8,086 jobs to citizens outside of the Columbus MSA, placing upward demands on discretionary services during workdays, and leaving economic impact on the Columbus table. Job growth over the prior 12 months was 1,100 (2.1 percent), while labor force growth over the prior 12 months was 1,414 (3.2 percent).
Job growth, wage growth, a skilled workforce and high-tech GDP growth have earned Columbus, Indiana, national recognition as the second-best small city overall in America for attracting additional capital investment. (4) Between 2008 and 2014, various enterprises invested at least $145 million into the Columbus economy. (5) Planned investments over those years exceed this amount, leaving additional promise for growth in the future, as planned investments are executed. For instance, in 2015, $156 million in planned investments were reported to the Columbus Economic Development Board, while in 2016, $71 million in additional capital investments had been announced through November 4 (see Table 2). (6)
State leading index and consumer sentiment: These numbers relate to Indiana and the United States, respectively, yet they also impact Columbus--particularly since Columbus is dependent on capital investment (manufacturing) and consumer spending (transportation). Since 2009, both of these measures had been generally increasing through June 2016, indicating continued economic expansion (see Figure 3).
Since the recovery began in earnest in January 2011, Indiana's state leading index (7) has averaged 1.78, measured monthly, while consumer sentiment (8) has averaged 81.5 over the same period. Currently, the state leading index stands at 1.8 (down 18 percent from a year ago) and consumer sentiment stands at 91.2 (up 4.5 percent from 2015).
Purchasing Manager's Index (PMI): In August 2016, the PMI measure came in at 49.4. A reading below 50 generally indicates that the manufacturing economy is contracting. However, the September and October readings were 51.5 and 51.9, respectively, suggesting that the manufacturing environment remains in expansion mode (see Table 3).
Yield curve: The yield curve for U.S. treasuries remains in normal form. Short-term rates remain near zero, while 30-year securities continue to hover around 2.5 percent as of November 4, 2016. (9) Inflationary threats from wage increases are now considered as the Federal Reserve Board continues to debate the decision to increase short-term rates in December.
Local building permits: In 2009, in the wake of the Great Recession, 125 residential building permits were...