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Latest Leading Indiana Index Shows Economic Improvement


Photo: reynermedia

The report shows that the improving employment situation in the state is leading to more home buying and more home construction.

Indiana’s economy looks slightly better this month compared to July, according to the Indiana Business Research Center’s latest Leading Index report.

The Leading Index for Indiana, a project through the Kelley School of Business at Indiana University, is crafted to be an analysis of Indiana’s economy, with a strong focus on economic indicators like manufacturing.

Timothy Slaper, Director of Economic Analysis at the Indiana Business Research Center, says this uptick is dramtically better compared to the last few months.

“I think what we’re seeing now is with the improving employment situation there are more people that are serious about purchasing new homes, which generates a little more enthusiasm among home builders, that would expect to roll into additional housing starts and the jobs associated with that,” Slaper said.

Slaper says the housing construction market has been slow to recover since the great recession, which is the main reason recovery has been slow.  He says the auto sector has been consistent, however, with sales over 16 million units annually.

Slaper says the Leading Index report will be discontinued on a regular basis starting in October because part of the Index’s calculation is interest rate spread, which he says is no longer a reliable indicator of GDP growth.

“The federal reserve policy since the great recession occurred has been to keep interest rates at an extremely low level,the short term interest rates at extremely low levels, and what that means is that there’s no market behavior, there are no market signals in that rate,” Slaper said.

Slaper says the center does not have the resources it would need to reconfigure the Leading Index without using interest rate spread.

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