Economic Update | Will the Consumer Continue Spending?

submitted by
Uric Dufrene, Ph.D., Interim Executive Vice Chancellor for Academic Affairs, Sanders Chair in Business, Indiana University Southeast

The combination of 4-decade high inflation and the subsequent acceleration of interest rates almost assured a recession in 2023. Some economists had even forecast a 100% chance of a recession.  Bloomberg Economics, for example, in October 2022 predicted that the probability of a recession was 100% within 12 months. One often-cited indicator was the difference in interest rates on 10-year and 2-year Treasury securities. The rate on 2-year Treasuries had moved higher than the rate on 10-year Treasuries, a consistent predictor of recessions in the past. In fact, for the past six recessions, a recession followed when the difference between the 10-year and 2-year moved negative.     

We now know that the recession that was almost guaranteed never occurred. Growth was quite robust, with the 3rd quarter Gross Domestic Product (GDP), the market value of goods and services, hitting 4.9%, and the 4th quarter topping 3%. A closer look at GDP shows that the consumer was the primary driver of last year’s strong growth. Consumers were supposed to break over inflation and high-interest rates, but we saw the opposite.  In three of the four quarters, consumers made the greatest contribution to the growth in GDP. Because the consumer makes up more than two-thirds of the U.S. economy, what happens to the consumer will have a lot to say about the overall state of the economy, including this coming year.   

One of the drivers of consumer spending last year was the labor market. While job growth did decelerate from the previous year, the labor market remained quite strong. Average monthly job gains continued to exceed numbers observed prior to the pandemic, and the unemployment rate remained at historical lows.   Job openings, one measure of the demand for workers, declined from the start of the year but remained higher than the number of unemployed. The growth in average hourly wages has declined from the recent peak of March 2022 but now exceeds the inflation rate. In fact, from April 2021 to April 2023, inflation exceeds the growth in average hourly wages, putting consumers in a foul mood. Consumer sentiment plummeted to the lowest level on record by June 2022, where similar levels had always been associated with a recession.   

Since April 2023 however, the change in average hourly earnings surpassed the growth in prices, placing consumers in a stronger position. This is one of the reasons why consumer spending continued through 2023, thereby escaping a recession. Consumers have noticed, and both consumer sentiment and confidence have increased from the start of 2023. Continued low initial claims for unemployment, available job openings relative to the number of unemployed, strong wage gains relative to inflation, and monthly job creation, should continue to fuel a steady level of consumer spending. Households are also beginning to tap into home equity, reversing a decline in home equity loan activity since the Great Recession. This is fueled by the record high levels of household net worth, serving as a buffer to any downturn and support for consumer buying.

Risks to this consumer outlook are beginning to surface, however. The household debt service ratio saw a large decline coming out of the pandemic, as households were able to use government stimulus and pandemic-driven behavior to pay down debt. All those gains have been erased, and household debt is just under the level that existed prior to February 2020. Higher borrowing rates have impacted consumer payments, with delinquencies on credit cards and consumer loans now higher than the level that existed just prior to the pandemic.     

We should expect interest rates to continue their decline through 2024. Declining mortgage and consumer borrowing rates will further boost consumer sentiment and confidence, helping sustain consumer spending. This depends on the continued decline in inflation through the year, and interest rate cuts anticipated by the Fed. 2024 is not off to a good start however, as inflation came in higher than expected, and there was an undershoot in retail sales, except for food and drinking places. One data point does not set a trend, and the next few months will provide key data for the remainder of the 2024 outlook. 

Economic Update | What is Manufacturing Signaling about 2024?

submitted by
Uric Dufrene, Ph.D., Interim Executive Vice Chancellor for Academic Affairs, Sanders Chair in Business, Indiana University Southeast

One of the strongest sectors for Louisville Metro last year was manufacturing. Sector payrolls grew by 4.3% over the year, only second to mining, logging, and construction of 8.1%.  Even though manufacturing today makes up a smaller share of total jobs compared to 20 years ago, the importance of the sector remains.   We can often gauge overall growth prospects and economic trajectory based on what is happening in manufacturing.

Louisville manufacturing payrolls peaked at around 96,000 back in 1999. Manufacturing employment then began a gradual decline every year until 2009. That’s when employment was decimated by the Great Recession, plunging to a level of about 61,000. Since that time, manufacturing employment has been on the upswing, with the latest numbers being close to 90,000. Despite the strong recent gains in manufacturing employment, services employment makes up a larger percentage of total jobs compared to 1999. In 1999, 79% of jobs were services related. Today, that number stands at 83%. The largest sector is now education and health services, and employment in professional and business services trails manufacturing by only 1,000 jobs.  In 1999, professional and business services payrolls trailed manufacturing by more than 30,000.    

Nationwide, manufacturing did hit a soft patch last year.  While total payrolls grew by more than 2 million jobs over 2023, manufacturing was just about flat, adding only 14,000 jobs. The ISM Manufacturing Index, a survey measure of manufacturing activity, was under 50 for all of 2023.  An index under 50 signals contraction, and above 50 represents expansion. Nationally, 2023 was a year of manufacturing contraction, as evidenced by year-over-year declines in industrial production.   

Signs are emerging that the nationwide manufacturing chill may begin to warm up, providing further evidence of a recession miss.  The last ISM report came in much higher than expected, and just under 50.  The last national jobs report, which blew all consensus estimates out of the water, showed that manufacturing added 23,000 jobs, exceeding the total number of manufacturing jobs added over 2023. In the last three months, national manufacturing added 56,000 jobs.  The ISM new orders statistic, a survey measure of new orders, had the highest increase since 2020, and is now above 50, signifying growth in new orders. The customer inventories index plummeted to the lowest level since October 2022, suggesting that inventories may be thinning out, a sign of future production in the pipeline. Inventory measures like the inventory-to-sales ratio have remained flat for the past seven months, suggesting that inventories have not grown relative to the level of sales.    While that measure has increased from the pandemic low of 1.1, when inventories were quite scarce, a measure of 1.3 is a historically low number. The current labor market will continue to support consumer spending, and when you compare this to the current state of inventories, national manufacturing may begin to see a steady increase in payrolls. 

We should also expect the same for Indiana and Kentucky manufacturing. Indiana manufacturing saw a decline of 4,000 manufacturing jobs over 2023, and Kentucky was just about flat, adding 2,000 jobs. A good part of Indiana losses likely occurred due to the slowdown in RV manufacturing. The Elkhart-Goshen metropolitan region, the RV manufacturing powerhouse, saw jobs peak in 2022 and have declined since, shedding 8,000 jobs. Over a period of one year, Elkhart manufacturing saw a decline of 10,000 jobs.    

Manufacturing often leads to growth or contraction in the overall economy.  Last year’s expected recession never materialized but manufacturing stalled.  As we begin 2024, manufacturing is now showing signs of growth, adding to the soft-landing argument.  Along with last Friday’s blowout payrolls report, 2024 may be shaping up as another year of steady growth. 

Global Technology Giant Chooses New Operation Location in Southern Indiana

Meta will open their newest technology operation center in Jeffersonville, Indiana, bringing $800M and 100 jobs to the region.

Jeffersonville, IN. (January 25, 2024)

Governor Eric J. Holcomb and Indiana Secretary of Commerce David Rosenberg joined executives of Meta Platforms Inc. (NASDAQ: META) today as the company announced plans to establish a new $800 million data center campus in Indiana. The new facility in Jeffersonville will support approximately 100 operational jobs and hundreds of construction jobs in the coming years.   

Meta, which powers products such as Facebook, Messenger, Instagram, and WhatsApp, will establish a nearly 700,000-square-foot facility at River Ridge Commerce Center in Jeffersonville. This new facility will be Meta’s 18th in the United States and will be supported by 100% renewable energy.

“We are thrilled to make Indiana and Jeffersonville our new home. We are committed to playing a positive role here and investing in the community’s long-term vitality,” said Brad Davis, director of data center community and economic development at Meta. “Jeffersonville stood out as an outstanding location for our newest data center thanks to its great access to infrastructure, deep pool of talent, and amazing community partners. Thank you to everyone who has helped us get here.”  

Based on the company’s investment plans, the Indiana Economic Development Corporation committed an investment in Meta in the form of a 35-year term data center sales tax exemption for a minimum $800 million in eligible capital. For each additional $800 million of eligible investment made at the site within that time period, the company will be eligible for tax exemptions for an additional 5-year period, up to a total term of 50 years. These incentives are performance-based, meaning the company is eligible to claim state benefits once investments are made. The city of Jeffersonville and the River Ridge Development Authority offered additional incentives.  

“Today is a great day for Indiana and for our southeast region as we welcome another major investment to the River Ridge Commerce Center,” Gov. Holcomb said. “Indiana’s efforts to cultivate industries of the future are already paying dividends for Hoosiers, attracting growth in critical sectors like data storage, semiconductors, energy and electric vehicles. We’re excited to welcome Meta to Indiana and look forward to the company’s partnership in growing Jeffersonville and the southeast Indiana region.”

“On behalf of the residents of Jeffersonville, I am ecstatic to officially welcome Meta to our community,” said Mike Moore, Mayor of Jeffersonville.  “River Ridge has been saving this 619-acre site for a mega company, and Meta’s investment and commitment to our community are proof that this strategy is paying off.  The economic activity around this new data center will support every sector of our economy, and we appreciate all those who have worked to bring Meta to Jeffersonville.” 

“1si is immensely excited to welcome Meta to Southern Indiana,” said John Launius, Vice President and Director of Economic Development at One Southern Indiana. “This project has been a long time coming, and we can’t wait to see the benefits the new data center campus will bring to our community, including 100 new initial jobs, and celebrate how this will propel our regional momentum and opportunities.”  

About Meta 
Meta builds technologies that help people connect, find communities, and grow businesses. When Facebook launched in 2004, it changed the way people connect. Apps like Messenger, Instagram and WhatsApp further empowered billions around the world. Now, Meta is moving beyond 2D screens toward immersive experiences like augmented and virtual reality to help build the next evolution in social technology.

About IEDC 
The Indiana Economic Development Corporation (IEDC) is charged with growing the State economy, driving economic development, helping businesses launch, grow and locate in the state. Governed by a 15-member board chaired by Governor Eric J. Holcomb, the IEDC manages many initiatives, including performance-based tax credits, workforce training grants, innovation and entrepreneurship resources, public infrastructure assistance, and talent attraction and retention efforts. For more information about the IEDC, visit iedc.in.gov. 

Media Contacts:  
Melanie Roe (Meta) – 650-798-7966 or melanieroe@meta.com  
Erin Sweitzer (IEDC) – 317-296-2556 or esweitzer@iedc.in.gov 
 

About One Southern Indiana
One Southern Indiana (1si) was formed in July of 2006 as the economic development organization and chamber of commerce serving Clark and Floyd counties. 1si’s mission is to help businesses innovate and thrive in the Southern Indiana / Louisville metro area via the three pillars of Business Resources, Economic Development, and Advocacy. For more information on One Southern Indiana, visit www.1si.org.

Contact:

One Southern Indiana
Brittany Schmidt, Content Marketing and Media Relations Manager
BrittanyS@1si.org
812-945-0266

 

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Economic Update | Labor Force Shaping Up as a Number to Watch in 2024

submitted by
Uric Dufrene, Ph.D., Interim Executive Vice Chancellor for Academic Affairs, Sanders Chair in Business, Indiana University Southeast

Consensus continues to build around the so-called “soft landing”.   This basically means that the economy will approach the Federal Reserve target of a 2% rate of inflation and will also escape a recession.  If there is a recession this year, it will be mild, and for many, the effects of such a recession will be minimal.  What happens in the labor market will be a major factor in any recession call.  We’ll use today’s column to get a closer view of a corner of the labor market that remains a significant challenge for both Indiana and Kentucky.

Nationwide, the labor market remains tight, but job growth is slowing compared to last year.   Over 2022, monthly job gains averaged just under 400,000 a month.  During 2023, job gains averaged almost 225,000 a month.  Even though the 2023 gain declined considerably from 2022, it is still an unusually high number.  We can expect some further deceleration in monthly job gains from 2023 as the economy continues to move toward normalization.     Even though job openings have come down, they remain stubbornly high and continue to exceed the number of unemployed.

One of the reasons why inflation declined from the June 2022 peak of 9.1% down to the latest reading of 3.4% is due to the supply side of the economy. Specifically, more workers returned to the labor force in 2023.   From the beginning of 2022 to the end of 2023, the nation’s labor force increased by approximately 4 million workers.  This provided headwinds to average hourly wages and was an important part of the disinflation story of 2023.  In March 2022, average hourly earnings were increasing by 7% over the year.  At the end of 2023, average hourly earnings were up by 4.3% over the year.   Another important anti-inflationary statistic is what is happening to productivity.  As productivity increases, average unit labor costs will decrease.  Employers can afford to pay more, and due to the productivity gains, declining unit labor costs will serve as an overall headwind to inflation. In the last two quarters, the U.S. economy saw significant gains to productivity, contributing to the disinflation in the second half of the year.  

While the nation’s labor force expansion was a key supply-side story in the fight against inflation, it is now contracting.  Since August 2023, the size of the nation’s labor force has gone down by about 400,000.  Last month, it declined by almost 700,000.  The labor force participation rate plummeted from November to December, dropping from 62.8% to 62.5%.  While payrolls were up in the establishment survey, the household survey showed that employment declined by almost 700,000. This could be part of the overall slowdown that economists have been expecting.  While a declining labor force could serve as a tailwind for inflation through average hourly earnings, an overall slowdown will counterbalance and result in overall disinflation.    Just as the Consumer Price Index became the biggest indicator to watch, labor force growth will garner some attention over 2024. 

Breaking down labor force by education attainment reveals some interesting trends. Labor force participants with a bachelor’s degree or higher almost exceed those with a high school diploma by almost 2 to 1. Labor force participants with a high school diploma total 35.7 million and with a college degree or higher, labor force totals 64.2 million.   We see a similar breakdown of the employed:  62.9 million with a college degree or higher remain employed, and the number of employed with a high school diploma stands at only 34.7 million. This is also evident in the unemployment rate by attainment. The high school unemployment rate is double that of those with a college degree:  4.2% compared to 2.1%. Despite the narrative, education attainment must be part of an overall economic development strategy.   The decline in the college-going rate for both Indiana and Kentucky is not promising. 

Across Indiana and Kentucky, labor force growth continues to be a significant challenge, perhaps partly an education attainment story. Over the long term, labor force growth for both states falls significantly under the national growth rate.  More recently, Kentucky’s labor force declined by approximately 3,000 over the year, and Indiana grew by just 13,000.      Other signs of a slowing economy show up for both states.  Indiana’s unemployment rate increased by 5/10ths of a point in a year, rising from 3.2% to 3.7%.  Kentucky’s rate increased from 3.9% to 4.3%.   Job postings are also slowing. Job postings, based on Lightcast data, peaked around March 2022 for both states and have been on a decline since, declining by 38%. We see a similar development for Louisville Metro, with job postings declining by 45% since March 2022. 

The last two years were all about inflation.  The big question was whether the Fed could reduce inflation without a significant decline in the economy.  The Fed now appears to have engineered what many thought was impossible:  a soft landing. As we start 2024, labor force growth may be shaping up as one of the key numbers to watch.   The early read has not been favorable.  

Moving Forward: Industry-Leading LSV Vehicle Company Speeding to River Ridge

Bintelli, a five-time Inc. 5000 company, will expand its electric vehicle operations to River Ridge.

Jeffersonville, IN. (January 17, 2024)

Bintelli, an industry-leading low-speed vehicle (LSV) company, will open an assembly and distribution facility in the River Ridge Commerce Center to produce electric golf carts and other low-speed recreational vehicles. Bintelli will invest over $4 million into the region by leasing and improving a building in River Ridge and adding new furniture and fixtures. The location will also have up to 67 new jobs with an average wage of over $26.00 per hour, with the company providing training for each employee. For more information on employment opportunities, please visit https://www.indeed.com/cmp/Bintelli.

Bintelli started as the dream of Justin Jackrel in 2000, and the company has quickly grown to be an industry standard. The company currently has the largest LSV assembly facility in the United States in South Carolina and is also a five-time Inc. 5000 company. Their products include golf carts, electric bicycles, scooters and mopeds, parts, and accessories created from quality craftsmanship.

“Bintelli’s explosive growth over the last few years has been extremely rewarding,” said Justin Jackrel, President of Bintelli. “We couldn’t be more excited to expand our operations with this new facility at River Ridge Commerce Center, thanks to PRG Commercial Property Advisors and Avison Young for their comprehensive site selection and brokerage services. The proximity to our new logistics partner, Mister “P” Express, played a big part in choosing this location for our new assembly facility.  We look forward to opening our newest expansion and working with such amazing new regional partners.”

“From one successful American Dream story to another, Mister “P” Express is thrilled to welcome Bintelli as our neighbor at River Ridge Commerce Center,” said Cindy Collier, President & CEO at Mister “P” Express, Inc. “Bintelli’s expansion from South Carolina to River Ridge is a strategic move for the company’s continued growth, while also bringing a tremendous economic impact to our community. We can’t wait for our shiny, red 18-wheelers to haul the nation’s best electric golf carts, bikes, and gas mopeds all across the country.”

Based on the company’s job creation plans, the Indiana Economic Development Corporation (IEDC) committed an investment in Bintelli of up to $675,000 in the form of incentive-based tax credits. These tax credits are performance-based, meaning the company is eligible to claim incentives once Hoosiers are hired.

“We are excited to welcome another innovative, fast-growing company to the state,” said IEDC Chief Strategy Officer Ann Lathrop. “Here in Indiana, Bintelli joins a robust network of quality manufacturers and a statewide ecosystem committed to advancing a business climate that powers the growth and talent needed to succeed.”

“The City of Jeffersonville is excited that Bintelli has chosen the River Ridge Commerce Center as the location for their newest facility,” said Jeffersonville Mayor Mike Moore. “This strategic investment into our community will add 67 new jobs as well as position Bintelli and their premium recreational vehicle products for long-term success in this growing sector.”  

“We want to welcome Mr. Jackrel and his team at Bintelli. Their investment showcases the strategic advantages offered by River Ridge and Southern Indiana,” said Jerry Acy, the executive director of the River Ridge Development Authority. “Bintelli has proven itself to be an industry leader in the rapidly growing recreational low-speed vehicle market and we are excited to partner with them as they grow here at River Ridge.”

“Bintelli brings a unique product to Southern Indiana and the surrounding regions,” said John Launius, Vice President and Director of Economic Development at One Southern Indiana. “Based on the growth that Bintelli has seen over the years, we are thrilled to have them in the region and can’t wait to watch their continued success as an industry leader.”

About Bintelli
As the only five-time Inc. 5000 company in the industry, Bintelli offers industry-leading quality craftsmanship, support and services, and fosters win-win partnerships with dealers. Bintelli has the largest stand-alone LSV assembly facility in the United States and produces environmentally friendly and top-of-the-line electric golf carts for a variety of uses that are distributed to dealerships and retail outlets across the country and internationally. For more information on Bintelli, visit www.bintelli.com.

About One Southern Indiana
One Southern Indiana (1si) was formed in July of 2006 as the economic development organization and chamber of commerce serving Clark and Floyd counties. 1si’s mission is to help businesses innovate and thrive in the Southern Indiana / Louisville metro area via the three pillars of Business Resources, Economic Development, and Advocacy. For more information on One Southern Indiana, visit www.1si.org.

Contact:
Bintelli
media@bintelli.com

One Southern Indiana
Brittany Schmidt, Content Marketing and Media Relations Manager
BrittanyS@1si.org
812-945-0266

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Building Up: Local Structural Component Manufacturer Plans for Increased Production

GHK Truss, LLC will expand its current operations due to growing customer demands.

Clarksville, IN. (December 19, 2023)

GHK Truss, LLC, a thriving structural component manufacturer located in Clarksville, IN, is expanding. The company has grown since its establishment in 2008, creating a need to expand its current production level. GHK Truss will invest around $1 million in state-of-the-art equipment, including $838,050 in new machinery and equipment, $170,000 in building improvements, and $5,000 in new furniture, fixtures, and IT/hardware. The company will also add up to 15 new jobs to accommodate the increased demand.

GHK Truss started with small roots in 2008 and a focus on excellence, purpose, and team. The team has grown from eight original employees to over 43 in the last fifteen years. GHK Truss is committed to innovation, value, and service for customers, and remains primarily involved in residential, commercial, agriculture, and multi-family building projects.

“We’re excited for the opportunity to grow,” says Mike Gilley, one of the co-founders of GHK Truss. “Our business has become a trusted brand, and adding the new machinery and employees over the next few years will allow us to continue that trust for our current and future clients.”

Based on the company’s job creation plans, the Indiana Economic Development Corporation (IEDC) committed an investment in GHK Truss of up to $175,000 in the form of incentive-based tax credits. These tax credits are performance-based, meaning the company is eligible to claim incentives once Hoosiers are hired.

“Indiana’s entrepreneurial ecosystem has a significant impact on the state’s economy and our local communities,” said Ann Lathrop, chief strategy officer of the IEDC. “The continued success and growth of Indiana-founded small businesses like GHK Truss is critical to our future and to creating more quality job opportunities for Hoosiers.”

“The Town of Clarksville enthusiastically supports GHK Truss’s plans to expand their current operations,” says Kevin Baity, town manager. “Their growing presence will continue to add value to our community and local economy. We congratulate GHK Truss on their continued success.”

“We’re thrilled to see GHK Truss expand its reach,” says John Launius, vice president and director of economic development at One Southern Indiana (1si). “GHK Truss’s expansion underscores the great business environment of Clarksville and the entire region. 1si will continue to work with GHK Truss as they operationalize this investment and serve their customers.”


About GHK Truss, LLC
Since GHK Truss’ founding in 2008 by three friends, the company has been on a path of growth. GHK Truss serves three states, Indiana, Kentucky, and Ohio, in various projects, including residential, multifamily, commercial, and agricultural. GHK Truss is committed to continuous innovation, value, and service for our customers needing structural building components. For more information, visit www.ghktruss.com.

About One Southern Indiana
One Southern Indiana (1si) was formed in July of 2006 as the economic development organization and chamber of commerce serving Clark and Floyd counties. 1si’s mission is to help businesses innovate and thrive in the Southern Indiana / Louisville metro area via the three pillars of Business Resources, Economic Development and Advocacy. For more information on One Southern Indiana, visit www.1si.org.

Contact:

GHK Truss
Michael Harlowe, Partner
Mharlowe@ghktruss.com
812-282-6600

One Southern Indiana
Brittany Schmidt, Content Marketing and Media Relations Manager
BrittanyS@1si.org
812-945-0266

 

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New Microbrewery Headed to Historic Georgetown

Off the Rails, LLC is opening a new upscale microbrewery and restaurant, Rails and Ales Brew House, adjacent to Georgetown Park.  

Georgetown, Ind. (December 18, 2023)

Georgetown keeps on growing. Off the Rails, LLC has chosen a location on State Road 64 in Georgetown’s downtown, adjacent to Georgetown Park. This new venture, Rails and Ales Brew House, will be a welcomed amenity to support continued residential growth in the region.

Rails and Ales Brew House will be an upscale microbrewery and restaurant, with its design and theme coming from the railroad tracks that travel through the historic portion of Georgetown. The two-story building will house two bars and a self-service restaurant.  Customers will also be able to order food to go using their drive-through.

“We can’t wait to bring this microbrewery and restaurant to Georgetown,” said Justin Juhasz, one of the owners of Rails and Ales Brew House. “Our hope is to create an atmosphere new to the Georgetown area and showcase our beautiful town by having a dining option close to the Georgetown Park.”

In addition to brewing their own craft beer, Rails and Ales Brew House will carry a selection of craft beers from other breweries, as well as wine options. They will also have TVs and other amenities to make it the local spot to relax and spend time with friends and family.

Off the Rails, LLC estimates over $1,000,000 will go into the building for improvements, new equipment, and more. The location also plans to hire at least eight individuals for full-time roles.  To support this growth, the Town of Georgetown is offering the company personal and real property tax abatement, phasing in its new property taxes over four and six years, respectively.

“The Town Council is thrilled to see this investment in our downtown,” noted Chris Loop, Town Council President. “Residents have been asking for a concept just like this, and our redevelopment plan calls for it. Our tax incentives should signal that the Town of Georgetown is open for business investment.”

“One Southern Indiana (1si) has seen a lot of growth in Georgetown over the last few years,” said John Launius, Vice President and Director of Economic Development with One Southern Indiana. “Off the Rails, LLC is bringing an exciting new opportunity for residents of Georgetown with Rails and Ales Brew House, and we will continue to partner with them to position them for long-term success in the region.”  

About Off the Rails, LLC

Off the Rails, LLC is a local company in Georgetown, Ind. The owners also own Floyd Farm & Feed, a local farm, feed, and pet/livestock supply store that also offers pet grooming. The owners of Off the Rails, LLC are community-oriented and host several events each year, including an Easter egg hunt and scarecrow competition through Floyd Farm & Feed.

About One Southern Indiana
One Southern Indiana (1si) was formed in July of 2006 as the economic development organization and chamber of commerce serving Clark and Floyd counties. 1si’s mission is to help businesses innovate and thrive in the Southern Indiana / Louisville metro area via the three pillars of Business Resources, Economic Development and Advocacy. For more information on One Southern Indiana, visit www.1si.org.

Contact:

Off the Rails, LLC
Rails and Ales Brew House
Justin Juhasz, Owner
floydfarmfeed@gmail.com
812-219-7699

One Southern Indiana
Brittany Schmidt, Content Marketing and Media Relations Manager
BrittanyS@1si.org
812-945-0266

Strategic Growth: Regional OEM and Parts Supplier Looks at Southern Indiana Expansion for Increased Capacity 

Rush Group Limited LLC is set to strategically expand its regional operations to support growth.

SELLERSBURG, IN. (December 11, 2023) 

Rush Group Limited LLC, established in 2011 as an automotive-industry partner in the Detroit area, looks to expand operations to Sellersburg, IN. As a minority-owned and purpose-driven company, the group fulfills an important need for large clients who have made diversity part of hiring and procurement processes while getting the highest quality products at a fair price. The Rush family of companies has focused on a community and customer-centered approach since their formation in 1984.

Rush Group Limited now plans to invest $15 million to support strategic operational growth, which includes new machinery and equipment, IT/hardware, building improvements, and new furniture and fixtures at the Sellersburg facility. Plans also include leasing 417,270 sq ft. in Silver Creek Logistics Center – Building B, located at 7803 Highway 31 in Sellersburg, IN, which was recently developed by Clarion Partners and represented by NAI Fortis Group. In addition, the Sellersburg-based operation will also add up to 180 new full-time jobs.

“We’re excited for the company’s continued growth as it indicates the confidence and value offered to our customers,” says Lori Lancaster, President of Rush Group Limited. “Our success is built on being a trusted partner to our clients and this investment in the Town of Sellersburg strongly positions us to meet our growing client demand.”

Based on the company’s investment and job creation plans, the Indiana Economic Development Corporation (IEDC) committed an investment in Rush Group Limited, LLC of up to $1.8 million in the form of incentive-based tax credits. These tax credits are performance-based, meaning the company is eligible to claim incentives once Hoosiers are hired. The Town of Sellersburg has also approved a five-year personal property tax abatement to encourage the company to select this site.
 
I’m thrilled to see Rush Group Limited choose Indiana as the location for their expanded operations,” said Ann Lathrop, Chief Strategy Officer at the Indiana Economic Development Corporation. “Rush Group Limited is a natural fit for Indiana—together we’ll play to each other’s strength in manufacturing, logistics and supply chain management. Their commitment to bringing high-quality career opportunities to diverse communities will bring prosperity and growth to Sellersburg. I’m really looking forward to seeing how the company and community will grow together.”

“The Town of Sellersburg enthusiastically welcomes this significant project from the Rush Group Limited to our growing community,” says Brad Amos, Council President for the Town of Sellersburg. “This planned investment, and subsequent hiring of 180 employees, offers a recurring benefit to our community and local economy that will be realized for years to come. Congratulations to Rush Group Limited on the continued growth within the region, and welcome to the Town of Sellersburg!” 

“This announced growth from Rush Group Limited is yet another nod to our region’s unparalleled manufacturing and logistics advantage,” says John Launius, Vice President and Director of Economic Development at One Southern Indiana (1si). “Rush Group Limited and their affiliated companies offer a tremendous and growing value to their customers, and we are honored they have chosen the Town of Sellersburg and our entire region to invest.”

About One Southern Indiana 
One Southern Indiana (1si) was formed in July of 2006 as the economic development organization and chamber of commerce serving Clark and Floyd counties. 1si’s mission is to help businesses innovate and thrive in the Southern Indiana / Louisville metro area via the three pillars of Business Resources, Economic Development, and Advocacy. For more information on One Southern Indiana, visit www.1si.org.  

 

Contact: 

Rush Group Limited, LLC
Aaron River
Aaron.Rivers@rushgroup-ltd.com
502-710-9970
 

One Southern Indiana 
Brittany Schmidt, Content Marketing and Media Relations Manager 
BrittanyS@1si.org  
812-945-0266 

 

Economic Update | On Final Approach for a Soft Landing

submitted by
Uric Dufrene, Ph.D., Interim Executive Vice Chancellor for Academic Affairs, Sanders Chair in Business, Indiana University Southeast

The economy is now on its final approach for a soft landing. Over the past few weeks, indicators provided key evidence that the nation’s economy will escape both a recession and move past higher inflation. As with all soft landings, it does not mean that we will escape a few bumps (i.e. slower growth next year) as we descend. The forward-looking equity markets also point to this scenario, as evidenced by the almost 10% gain in the Dow since early November.

Several key reports came out that support this soft-landing scenario. The first has to do with inflation itself. The last Consumer Price Index release showed that inflation declined to 3.2%, and the core rate (minus food and energy) declined to 4%. The significance of the report, however, was that it came in below expectations, by just 1/10th of a point.   The market was expecting a CPI of 3.1%, and the report showed price gains of 3%. On a monthly basis, the CPI showed that inflation was 0%. After the equity markets digested this information, the reaction was overwhelmingly positive, with the Dow increasing by almost 500 points, and the NASDAQ up by over 2% on the day.  The CME Fed Watch Tool now shows a 97% probability of no rate increase at the December Fed FOMC meeting.  The odds currently favor the first rate reduction in May 2024, although it is still less than 50%.  The other piece of inflation data digested by markets was the preferred Fed inflation measure, the PCE Deflator.  It also provided additional evidence that inflation is getting under control, showing price increases of just 3%, moving closer to the 2% Fed target.

While labor markets remain tight, with job openings exceeding the number of unemployed, evidence continues to build that the job market continues to show some softening.  The JOLTS (Job Openings and Labor Turnover Survey) report showed a decline in nationwide job openings to 8.7 million, with the market expecting 9.3 million.  Fewer openings show that the supply and demand of labor continue to move toward a greater balance. Meanwhile, the last employment report (from a survey of establishments) showed the nation gained 199,000 jobs, just over the market consensus.  A portion of this gain was returning UAW strike workers and state and local government showed a big job in payrolls.  The private sector only showed job gains of 150,000, and when you strip away the return of UAW workers, private payrolls came in weaker than in the past.   In the past six months, private payroll gains averaged 129,000, compared to 228,000 in the first half of the year.    

On the plus side, there was a big jump in the nation’s labor force (from the household survey of the employment report), increasing by more than 500,000. This is important for the supply side part of the economy and the headwinds this will place on average hourly earnings, both contributing factors to containing inflation.  More impressive than the gain to the labor force was the increase of more than 750,000 in the number of employed.   Employment increasing faster than labor force growth will push the unemployment rate down, and it did indeed fall by 2/10ths of a point.  That was quite significant. 

When you combine weaker payroll growth and a decline in job openings, a drop in the unemployment rate, and continued deceleration in average hourly earnings, a soft landing gets into view.

One more significant piece of economic data released in the past couple of weeks was on productivity and unit labor costs.  At the start of the pandemic, productivity saw a significant jump as fewer workers maintained or even increased production. This increased output, per unit of labor, led to a spike in labor productivity. Starting around the 3rd quarter of 2020, productivity bounced back and forth and then in early 2022, began a gradual decline. This was surprising due to the significant increase in capital investments and technologies over 2021, which should have led to an increase in productivity.  Since March of this year, productivity has been on the rebound, and the last report showed another noticeable increase. This is important because productivity results in lower unit labor costs, thus making companies more profitable, and helps to contain inflation.   

So, when we combine economic indicators on inflation, labor markets, and productivity, one can conclude that the economy is on the final approach to a soft landing.  

Economic Update | A Slowdown on the Horizon?

submitted by
Uric Dufrene, Ph.D., Interim Executive Vice Chancellor for Academic Affairs, Sanders Chair in Business, Indiana University Southeast

In just one short week, the S&P 500 added more than 5%, and the Dow more than 1,600 points.  It was not just one indicator that led to this surge, but a confluence of events and indicators that provided more convincing that the Fed is done with interest rate increases. This is consistent with the call made back in June, that the chance for any additional Fed hikes for the rest of the year would be doubtful. Next year is to be determined. For now, we can expect an extended pause in rates.

Market pricing places a high probability of a hold in rate increases until May 2024, when the odds favor the first rate cut.  Several factors are contributing to this market sentiment.  First, more evidence surfaced that the economy may be entering a cooling phase, despite the blockbuster 3rd quarter GDP report.  GDP increased by almost 5%, an above-normal rate of growth, but we must remember that GDP is backward-looking. Last Friday’s national employment report showed that the economy added 150,000 jobs in October, short of the 180,000-consensus forecast. Looking under the hood, the private sector economy only added just over 100,000 jobs.  More than 1/3 of job gains came in the government sector, adding 51,000 jobs. Additionally, the strong payroll gains of August and September were less than originally expected.  Revisions wiped away 101,000 of these payrolls. 

The household survey component of the report showed an overall decline in employment of 348,000 and a decline in the labor force. The number of unemployed increased by 146,000, pushing the nation’s unemployment rate to 3.9%, representing a ½ percent increase since the year-low rate of 3.4%.  Altogether, the report showed an overall softening in the nation’s labor market, a marked decline from the job gains observed over 2022, and earlier this year. 

Other signs of a pending slowdown came from a national survey on manufacturing.  The report indicated another contraction for manufacturing, more than the consensus forecast. The survey pointed to reduced new orders and order backlogs and declining employment. A sampling of respondent comments:  “Economy absolutely slowing down”, “Seeing a slowdown in bookings”, and a “Slow fourth quarter”.

The slowdowns in some parts of the economy are counterbalanced by the resilient consumer.  The last report on retail sales was very strong, more than what had been expected. Unfortunately, the robust consumer spending that we’ve been observing will gradually begin to cool down. High-interest rates, overall higher prices, including the cost of shelter, and approaching labor market softness will finally begin to curtail consumer activity.  Beyond that, the significant pickup in consumer spending that the economy observed due to government stimulus and pandemic-induced behavioral changes will gradually bring the consumer back to earth. It is only a matter of time.    

Some clues and evidence on a softening consumer economy are beginning to emerge.  The household debt ratio has moderated since December of last year but remains higher than pre-pandemic levels.  Consumers have been using debt to finance some of this spending, and this is not sustainable. Delinquency rates on consumer loans and credit cards are now higher than levels that existed just before the pandemic. Auto loan delinquency rates are also higher than levels that existed at the start of the pandemic. Mortgage delinquencies have also been climbing, but still lower than levels of 2020.  Discretionary spending at food and beverage places, arguably a leading consumer indicator, is beginning to show some erosion. Credit card transactions, as provided by the Bureau of Economic Analysis, on food services and drinking places have noticeably declined in activity since August. 

It is premature to call a recession at this point.  While some consumer red flags are beginning to emerge, the household sector is still stronger today than prior to the pandemic.  Higher net worth levels from housing values and equity markets will serve as a buffer for any slowdown. The next three months will contain some valuable indicators on the economy’s trajectory in 2024.  As of today, a slowdown may be on the horizon.