Lafayette forecast 2020.

• Author: Hall, Tanya

The Lafayette Metropolitan Statistical Area (MSA) had its Greater Lafayette region ranked among the top 100 fastest-growing metropolitan areas since 2010. While the population does continue to grow, a tight housing market and other economic indicators provided surprising numbers in 2019 that opposed the projected trajectory. Comparison of 2018 and 2019 figures showed a significant amount of churn in the labor market, which yielded fewer individuals employed, declines in the number of unemployed individuals and a smaller labor market. Likewise, the number of jobs declined modestly, weekly wages were virtually stagnant, yet per capita personal income rose. This article will explore these data points a bit further.

The Lafayette MSA (which includes Tippecanoe, Benton and Carroll counties) has experienced steady population growth over the past 20 years. The MSA's strong and diverse economy, in addition to the economic activity associated with Purdue University, drives much of the growth for the region. Thus, the Lafayette MSA remains a region to watch since its ranking as #2 on Forbes' 2018 list of "the best small places for business and careers."

Since 2000, the MSA has expanded by 44,000 residents, a sustained growth of nearly 2,320 individuals per year (see Figure 1). The Indiana University Center for Econometric Model Research (CEMR) anticipates a smaller growth in the region in 2020 with 1,150 residents, pushing the total population count to 224,215 individuals.

Labor

The Lafayette MSA labor market has witnessed a subtle ebb and flow of individuals working or looking for work (i.e., the labor force). Between September 2018 and September 2019, the MSA had a range of 106,221 to 113,795 individuals in the labor force, with roughly 97 percent employed. The unemployment rate reflects this full employment phenomenon, which often was lower than the state and nation's rate (see Table 1). Last year's outlook predicted the MSA would see unemployment rates hovering around 3 percent. The rate did dip below 3 percent several times and topped out at 3.7 percent in January and February. In 2020, pending any major market disruptions, the local unemployment rate will likely mirror 2019. All signs point toward a continued strong demand for workers; however, wages will need to increase to entice more workers to enter the labor force.

The year-over-year comparison between September 2018 and 2019 shows a 3,683 drop in the labor force and a reduction of 284 workers from the unemployment rolls. Additionally, over the same time frame, the Lafayette MSA saw employment levels fluctuate by around 7,400, which is puzzling given the strong demand for workers. Last year's Lafayette outlook expressed a need for the region to attract new workers as signs were pointing to a very tight labor market. The region is still poised to experience job growth through 2021; thus, the tight labor market trend will continue.

Table 2 looks specifically at regional employment between 2018 and 2019 in the Lafayette MSA. During 2019, the MSA experienced a 2.9 percent drop in employment, or nearly 3,100 jobs. The losses came from the government sector, namely state and local government positions. A few other...