Evansville forecast 2013.

• Author: Khayum, Mohammed
• Position: Economy and employment of Metropolitan statistical areas - Statistical data

Economic performance in 2012 highlights the complexity of making accurate forecasts even for relatively short time horizons. Errors in predicting turning points for key influences on economic activity such as business sentiment and personal consumption expenditures are critical illustrations of the complex forces that impact forecasting accuracy. Even as the national economy maintained an upward trajectory in output and employment during 2012, there have been noticeable changes in direction in consumer confidence, personal consumption expenditures and business investment between the first and third quarters of 2012.

By the end of 2011, the economic recovery that started in mid-2009 exhibited distinctive features when compared to previous post-World War II economic recoveries. The current recovery is taking longer to attain pre-recession levels of employment and output, and is characterized by mixed signals on its intensity and momentum. These characteristics raise fundamental questions about the relative roles of structural change and cyclical fluctuations in explaining the characteristics of the current recovery.

An examination of the Evansville economy during 2012 indicates some improvement in the labor market but an unexpected decline in real output. Increases in personal income and real retail sales that were evident in 2011 continued in 2012 but at much slower rates. In 2012, nominal personal income saw an estimated 3.0 percent increase and real gross metro product decreased by an estimated 1.6 percent. These updated estimates are below forecasts of 4.7 percent and 3.0 percent, respectively, that were made at the end of 2011 and reflect the impact of business closures in the local economy.

The unemployment rate fell from 8.3 percent in January 2011 to 6.7 percent in September 2012, compared with a drop in the national unemployment rate from 9.8 percent to 7.8 percent over the same time period. Job gains occurred in the following sectors: arts, entertainment, and recreation; transportation and warehousing; health care and social assistance; and utilities. Activities experiencing jobs losses include retail trade, construction, manufacturing, mining and financial services.

Mixed signals are also evident in the housing market. Homeowners experienced some home price depreciation as existing-home prices decreased from an average of $92,600 in 2011 to $92,100 in the first quarter of 2012, and mortgage originations were estimated to increase...