Outlook for 2007.

• Author: Conover, Jerry N.

For more than a third of a century, a group of IU faculty has gathered at the Kelley School of Business each fall to consider the economic outlook for the coming year. In the process, they forecast the prospects in terms of global, national, state, metropolitan and agriculture perspectives, and they also assess the outlooks for the financial and housing markets.

This year's discussion began with a review of the latest forecast based on the econometric model of the United States developed by Indiana University's Center for Econometric Model Research (CEMR). The researchers then made adjustments to the model's predictions to accommodate expectations about key underlying variables. The CEMR model of Indiana's economy similarly provided a basis for projecting the outlook for the state.

These economists and selected colleagues presented their predictions to audiences across Indiana through the Kelley School's Business Outlook Panel program. In each city, the panel was joined by an expert on the local economy who discussed the outlook for the metro area. The 2007 predictions of all the Business Outlook panelists are presented in this issue of the Indiana Business Review, along with additional supporting detail.

The 2006 economy has wound up fairly close to the panel's forecasts of a year ago, and even better in some respects, but with a tendency toward slower growth. This year's outlook, while still calling for growth, is not as optimistic as last year's as the housing market, consumer spending, and volatile energy prices pose notable risks to the economy.

The 2007 outlook issue of the Indiana Business Review begins with Andreas Hauskrecht's assessment of the international outlook, predicting...