By Brenda Showalter, The Republic
bshowalter@therepublic.com
Experts from Indiana University's Kelley School of Business had little positive news to share Friday at the annual Economic Outlook Breakfast.
The year ahead, the panel predicted, would include higher unemployment, lower home prices, a weaker construction sector and manufacturing job losses.
John Boquist, professor of finance, said factors that led to the financial crisis included the end of the technology boom, speculation in the real estate market and lower lending standards.
"It was a perfect storm brewing," Boquist said, adding that panic even- tually hit, and the stock market tumbled.
"I don't think the bleeding is over."
Columbus better off
Jim Smith, Columbus resident and senior lecturer in finance, said he believed the local economy has a good chance of faring better than the state and nation during the recession.
"The economic base in Columbus is much more diversified than it used to be," Smith said.
"The area is better positioned to defend itself."
Since the last recession, the share of manufacturing jobs in Bartholomew County has fallen from 42 percent to 28 percent.
Some forecasters place the Columbus metropolitan area among the top three economic growth areas in the state, Smith said.
Although Columbus had an unemployment rate of more than 13 percent during the recession in 1982, Smith predicted the rate would stay between 6 and 7 percent in 2009.
Smith said some of the key players in Bartholomew County's economy are in good positions, including Cummins Inc. and Columbus Regional Hospital.
"(CRH) managed the disaster very well, and as it regains momentum, it will help Columbus," Smith said.
Irwin Financial Corp. is a question mark, Smith added, but "there's a good chance the worst is behind them."
Indiana could struggle
Phil Powell, assistant clinical professor of economics, said the state's economy has been flat during the last three years.
"And that wasn't during a recession," Powell said.
While Powell credited Gov. Mitch Daniels with working with economic development officials to bring new jobs to Indiana, the state still will remain vulnerable with its reliance on manufacturing.
"We are the most manufacturing-intense state in the country," Powell said.
One of Powell's biggest concerns: Indiana workers make less in comparison to workers in other states because they are not as educated and skilled.
He also noted that some Indiana companies have benefited from the weak U.S. dollar making exports attractive - but the dollar's value has been increasing.
Powell said he was unsure on how President-elect Barack Obama's stand on re-evaluating trade agreements will play out.
On a positive note, Powell said housing will continue to struggle but "it has been down so long, it should be the first to go up."
Worldwide, emerging economies, including China and India, have helped drive markets, but further troubles could have other negative effects, including increasing levels of poverty, said Ellie Mafi-Kreft, assistant professor of economics.