Columbus forecast 2020.

• Author: Mohler, Steve H.

The Columbus metropolitan statistical area (MSA) has long supported a strong manufacturing-based economy linked to the transportation industry and light vehicle manufacturing. While structural changes have occurred over the years, dependence on these two industries continues as more than 50 percent of the Columbus MSA gross domestic product (GDP) has stemmed from durable goods manufacturing since 2012. (1) Columbus has experienced seven years of solid economic growth starting in 2010, excluding the minor 0.1 percent decline in GDP in 2016, which reflected a 3.5 percent decline in durable goods manufacturing and a 24.2 percent decline in real estate (which were partially offset by increases in natural resources and trade). (2) With strong business investment plans, a flat year for Cummins, solid consumer confidence, and stable light vehicle sales in North America, Columbus should conclude 2019 on a positive note as we approach 2020. In light of mixed economic indicators, current projections are for the local economy to grow during 2020 at a pace between 0 percent and 1 percent.

Key measures

Employment and labor force: From 2011 to 2018, the Columbus MSA nonfarm job growth ranged between 400 and 4,200 annually, resulting in a total increase of 11,200 jobs (see Figure 1). In the first nine months of 2019, job growth of approximately 200 positions reflects an increase in nonfarm positions of less than 1 percent.

In 2017 (the latest commuting data available), Columbus attracted approximately 13,100 workers or 20 percent of the workforce from outside the county (including Johnson, Jackson, Jennings, Brown and Marion counties). (3) Based on the same 2017 data, approximately 5,100 Bartholomew county residents commute to Jackson, Marion, Johnson and Decatur for their jobs. Between 12,000 and 13,500 workers from outside Columbus will continue to be required for staffing local firms and, therefore, commuting patterns should remain relatively stable. However, labor supply pressures are expected to increase as new employers, such as Amazon, enter markets in surrounding counties.

Labor force participation: Labor force participation rates for the U.S. and Indiana have remained relatively stable between 63 percent and 65 percent since 2014. (4) The Columbus labor participation rate increased from 2014 to 2018 to a reading of 72 percent. This high labor force participation rate reflects the growing tension between job need and talent availability in the area, placing pressure on firms seeking to expand or replace retiring employees. Additionally, weekly earnings pricing pressures can be seen in the data, as the high labor force participation rate coupled with the low unemployment rate results in competition for the limited labor resource pool.

Weekly earnings: Weekly earnings for the Columbus MSA have experienced an impressive 62 percent growth from a low of $730 in 2009 to $1,186 in 2018. As the labor market has tightened between 2014 and 2018, weekly earnings have increased 10 percent, while inflation (measured by national CPI-U) impacted consumer spending power by 5.8 percent during the same period. (5) However, the first nine months of 2019 reflect a decline in weekly earnings from 2018. September 2019 weekly earnings are 0.5 percent lower than September 2018, with each month in 2019, except June, reflecting lower weekly earnings than the prior year. This same trend is reflected in average weekly hours.

Average weekly hours have climbed from 37.4 per week in 2016 to the highest level in over 10 years of 40.2 per week in 2018--reflecting a growth of more than 7 percent in this two-year interval (see Figure 2). This growth trend was not reflected in 2019, as average weekly hours for each of the first nine months of 2019 are below the 2018 levels. The rate of growth for average hourly earnings has declined from about 6 percent in 2014 to around -1 percent in 2018. (6) However, average hourly earnings have increased in 2019, with September 2019 reflecting a 6 percent increase from September 2018.

Unemployment: The continuing economic strength in the U.S., Indiana and Columbus pushed unemployment rates lower in September. The unemployment rate for the U.S. was 3.3 percent in September, while Indiana's unemployment rate (not seasonally adjusted) was 2.8 percent--the lowest September rate since 2000.7 Columbus' September unemployment rate of 2.0 percent (not seasonally adjusted) is also the lowest September unemployment rate since 2000. The Columbus MSA unemployment rate is slightly lower than in the counties contiguous to Bartholomew, reflecting the solid employment base in this county. Table 1, which shows selected Indiana metros and micros, highlights that unemployment rates are lower than the national average across the state. This table also demonstrates the greater volatility of Indiana's unemployment rate with changes in national economic trends.

Planned business investment: Columbus firms continue with business investment planning, although the level is down from the recent peak of $153.2 million in 2015. Eight projects in 2018 totaling $135.4 million were followed by six planned projects in 2019 for $60.4 million. Since 2011, an estimated $810 million of planned investment in the Columbus MSA was projected to create an estimated 2,900 jobs (see Table 2). With the planned investments announced in 2019, this business investment trend continues to reflect confidence by local businesses.

Economic indicators

Leading index for Indiana: The leading index for Indiana (LII) developed by the Philadelphia Federal Reserve Bank reflects a six-month forecast that considers nonfarm payroll, average hours worked, the unemployment rate, wage and salary...