Lafayette forecast 2023.

• Author: Hall, Tanya

The Lafayette Metropolitan Statistical Area (MSA) is a vibrant region with demonstrated economic resiliency. For the second year in a row, the greater Lafayette area was named the best metro in the nation for career opportunities by SmartAsset. (1) According to 2021 data, the region has grown economically, despite tight labor markets and housing inventory. Looking ahead to 2023, current economic conditions are signaling a more tepid growth due to pressures from inflation and rising costs for both goods and labor.

The vast majority of the population in the Lafayette MSA (defined in this article as Tippecanoe, Benton and Carroll counties unless otherwise noted) (2) resides in Tippecanoe County (187,076 residents or 86.5% of the metro population), followed by Carroll County with its 20,444 residents. (3) Despite the strong population contraction during 2020 and 2021 (likely related to COVID-19), the Lafayette MSA grew by 11,441 people (+5.6%) between 2011 and 2021.

The presence of Purdue University and its related economic activity, in addition to the region's strong economic base, has allowed the MSA to grow over the years. Most of this growth has occurred in Tippecanoe County, as evidenced by the smaller surrounding counties experiencing minimal growth or declining population numbers. Looking forward, the Indiana University Center for Econometric Model Research (CEMR) projects 0.9% growth in the region in 2023.

Labor

As of September 2022, the Lafayette MSA was averaging nearly 110,000 individuals participating in the labor force (January through September, not seasonally adjusted). Those in the labor force have been able to find work, as is evidenced by the 2.0% unemployment rate, which is lower than both the Indiana rate (2.2%) and the national rate (3.3%). Table 1 displays how as the year progressed, more individuals entered the labor force and became employed, thus the continuous drop in unemployment figures. For perspective, the peak number of labor force participants was 115,210 in November 2019. The peak employment occurred in December 2019 (111,989 workers), thus the MSA is missing 3,754 workers as of September 2022. The low unemployment rate emphasizes the need for more individuals to participate in the labor force, which is a common story throughout Indiana.

Looking forward to 2023, if the economic trends continue, then the MSA will maintain a tight labor market, with employers competing for workers in a limited pool of candidates. It is predicted that the labor force will continue to slowly grow and unemployment rates will stay in the upper 1% to lower 2% range--which indicates full employment. However, at the time of this writing, strong headwinds of inflation, rising labor costs and worker shortages are affecting markets and causing nationwide firms to begin layoffs. Thus, there is a chance that similar activity...