Indianapolis-Carmel forecast 2013.

• Author: Anderson, Kyle J.

Unfortunately, last year's forecast for Indianapolis was mostly correct. We have seen a relatively weak year in 2012. The Indianapolis-Carmel metropolitan area (1) should expect to see a rebound in 2013 along with the rest of the country and state.

Employment and Wages

The unemployment rate in Indianapolis dropped to just over 7 percent by late 2012. While this represents a sizable drop in the rate, the news is not all good. The number of jobs actually decreased by 4,400. The decline in the unemployment rate is due to the labor force shrinking by a larger amount. Until the local economy begins adding jobs at a much greater pace, unemployment will remain above 7 percent.

The employment situation in Indianapolis also looks poor compared to other cities. Table 1 shows change in labor force and unemployment for Indianapolis and four comparable Midwestern cities. Indianapolis showed the smallest dedine in the number of unemployed and was one of only two that had a shrinking labor force. It is difficult to pinpoint an exact cause as to why the area is not recovering strongly relative to other cities. It may be that the recovery in manufacturing and construction is having a greater effect in other areas.

TABLE 1: Indianapolis Unemployment Comparison, 2011 to 2012 Metro Area Labor Change in Number Unemployment Unemployment Force of Unemployed Rate, 2011 Rate, 2012 Change Indianapolis -1.9% -17.4% 8.4 7.1 St Louis, MO -1.6% -21.6% 8.8 7.0 Cincinnati, 0.4% -22.7% 8.3 6.4 OH Louisville, 0.4% -20.7% 9.6 7.6 KY Columbus, OH 1.0% -22.2% 7.4 5.7 Note: Data are for September of each year. Source: Bureau of Labor Statistics Indianapolis did experience a spike in jobs and the labor force in the first quarter of 2012 (see Figure 1). This is likely attributable to hosting the Super Bowl, and the economic benefit of that was likely quite large. However, it was also temporary and did not contribute to a strong year of economic growth.

[FIGURE 1 OMITTED]

A few industries did experience significant positive growth. Table 2 provides the change in number of jobs and average wages by industry for the Indianapolis area. It should be noted that the most recent data available are from the first quarter of 2012, which experienced slightly inflated numbers due to the Super Bowl. Health care continues to see growth in jobs of greater than 3 percent, and wages are rising as well. Other industries with significant gains that are likely more than temporary include...