The Indianapolis-Carmel-Anderson economy continues to experience steady economic growth since the Great Recession ended. Unemployment is quite low and job growth is steady. However, leading indicators suggest that 2020 will be a year of slower growth.
Employment and wages
The labor market in the Indianapolis market continues to perform very well for workers. Unemployment is hovering around 3 percent and is likely to remain low throughout 2020.
Wage growth remains a challenge for workers in the area. Through the first quarter of 2019, average weekly wages increased at a rate of 1.2 percent over the prior year, barely keeping up with inflation. Later in 2019, wages seem to be rising more quickly, but time will tell whether these wage gains will remain. If the economic growth can remain steady through 2020, wages will certainly see upward pressure. This is a welcome trend for workers, and is probably good for the economy as a whole--but it leads to managerial challenges and lower profit margins for businesses.
Population growth has focused on the surrounding counties over the last number of years, and 2018 marked a significant milestone. The population of the nine surrounding suburban counties in the MSA--excluding Madison County (Anderson)--now exceeds that of Marion County (see Figure 1). The population growth rate in Marion County is steady at 1.1 percent per year, while the surrounding counties are growing at 1.7 percent per year. Both numbers compare favorably to a statewide population growth rate of 0.5 percent per year.
The Indianapolis metropolitan area is drawing in people from other parts of the state, helping spur greater economic growth.
Bright spots in employment sectors include construction, transportation and warehousing, and wholesale trade.
Manufacturing jobs were strong in the early part of 2019, with growth of 3.1 percent (see Table 1). However, weakness in output indicates that this number will likely turn negative in 2020. Manufacturing plays a large role in the employment picture due to both the size of the sector and the relatively higher wages.
Housing and construction
Housing prices continue to rise in Central Indiana, with the average selling price going up by 6.2 percent over the four quarters. This reflects two trends of more building of higher-end housing and general residential inflation.
Residential building permits are a key indicator of growth in housing in the area...