Global Communications Company Signals Expansion to Meet Growing Demands

Communications Test Design, Inc., is expanding their global operations with a new location in Charlestown.   

Charlestown, IN. (June 20, 2024) 

Communications Test Design, Inc. (CTDI) is expanding into Charlestown, IN! The global company will open a new location at 1651 Penny Martin Lane, within River Ridge Commerce Center, in response to a growing customer base.  

CTDI is a global leader in engineering, repair and logistics services that provides solutions to the communications industry.  Customers of CTDI include major telecommunication carriers, cable service providers, and OEMs worldwide. CTDI has two business units: Networks & Cable and Mobility & Consumer Electronics. This new location, within the River Ridge Commerce Center, is expected to bring over 600 new jobs to the region.  

“Southern Indiana is the perfect location for CTDI to find continued success,” said General Manager of Real Estate Toby Booker. “The surrounding areas have proven to be a great area for technology companies, and we look forward to building our workforce with steady, good paying positions. We invite all interested applicants to visit www.ctdi.com to learn more.” 

Based on the company’s job creation plans, the Indiana Economic Development Corporation (IEDC) committed an investment in CTDI of up to $4.75 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.  

 “Indiana’s economic momentum continues to build as companies like CTDI commit to growing and creating new jobs statewide,” said Ann Lathrop, chief strategy officer at the IEDC. “In today’s climate, speed is the new incentive, and mega sites like the River Ridge Commerce Center make investing easy, helping companies get up and running quickly. In addition to creating hundreds of new Hoosier jobs, CTDI’s expansion will accelerate further economic growth and community development in Charlestown and the surrounding southern Indiana region for years to come.” 

“Charlestown celebrates CTDI’s continued success and growth in the community,” said Charlestown Mayor Treva Hodges. “Adding yet another global leader in our backyard only affirms the significant value our residents and community investments offer to companies looking to locate and expand operations in Southern Indiana.” 

“We are excited for CTDI’s continued growth at River Ridge, and their commitment to the Southern Indiana region,” said River Ridge Development Authority Executive Director Jerry Acy. “CTDI‘s expansion further demonstrates the competitive advantages companies gain by doing business at River Ridge and highlights Southern Indiana’s growing reputation as the place to be within the tech community.” 

“Communications and related infrastructure and capacity will continue to be critical to our economy, and having a global communications leader in Southern Indiana is very exciting,” said Lance Allison, president and CEO of One Southern Indiana. “Additionally, CTDI’s commitment to the community and local economy will have returns to our community for years to come.” 

About CTDI 

Founded in 1975, CTDI is a full-service, global engineering, repair and logistics company that provides best-cost solutions to the communications industry. CTDI provides a dynamic business model to global customers that is comprised of two business units (Networks & Cable and Mobility & Consumer Electronics) and nine divisions: Carrier Networks, Cable & Business, MSO Video & Broadband, OEMs, Product Supply, Carrier Mobility, ACE, MPS iOS and MPS Android. CTDI’s customers include the major telecom carriers, cable service providers, and major OEMs from around the world. Our corporate headquarters are in West Chester, PA, and we support an expanding customer base with over 20,000 associates in over 100 facilities worldwide. 

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: 

Communications Test Design, Inc. (CTDI) 
Armena Ballard 
armena.ballard@ctdi.com 
610-772-6183 

One Southern Indiana 
Brittany Schmidt, Manager of Programs, Events, and Groups 

BrittanyS@1si.org  
812-945-0266 

 

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Economic Update | Will Consumers Finally Tap on the Brakes?

submitted by
Uric Dufrene, Ph.D., Sanders Chair in Business, Indiana University Southeast

Consumer spending on goods and services makes up more than 2/3rds of the nation’s economy. Healthy consumer spending drives the economy, and weaker spending can lead to slowdowns or even a recession. Coming out of the pandemic, the consumer emerged as strong as ever, initially spending high on goods and then moving on to services. However, the most recent report on consumer spending showed that spending cooled unexpectedly. Is this the beginning of a pullback from the consumer, leading to slower growth for the rest of the year?    

One irony, and there have been many during the past couple of years, is that consumer moods were quite dismal, but consumer spending remained elevated. Consumer surveys, like the Conference Board’s Consumer Confidence Index or the University of Michigan Consumer Sentiment,  have been at record lows. But even with low levels of consumer sentiment, consumer spending continued to be solid. Forty-year high inflation, along with higher interest rates, were the primary drivers of this negative consumer sentiment, with recent levels being the lowest in 50 years. As inflation began to decelerate, consumer sentiment resumed a jagged edge climb, up until last month, when consumer sentiment plunged almost 10 points. Consumer confidence, which is more reflective of labor market views, has not seen the depths of consumer sentiment, but over the past year, it has moved sideways. 

Along with subdued measures of consumer sentiment, consumers are beginning to show some signs of stress and changes in behavior. Credit card delinquencies have been rising since the end of 2021 and are now at the highest level since late 2011. Non-business bankruptcy filings are the highest since the 3rd quarter of 2020 when the economy saw a jump in pandemic-induced bankruptcies. 

While the inflation rate has come down compared to 2022, it remains elevated and above the preferred 2% Fed goal.   And while the inflation rate is lower now than a year ago, the price index itself is about 20% higher than two years ago, which means that prices remain higher.

All this is beginning to show up with changes in consumer behavior. An examination of foot traffic, based on Placer.ai data, shows that discount and dollar stores foot traffic across the Louisville Metro region is up 17% compared to last year.  Consumers are seeking bargains to combat higher prices. Foot traffic at restaurants, which rely more on consumer discretionary spending, is down 10%.  Furniture and home furnishings foot traffic is down 10% from last year. Attractions, which include cinemas and similar entertainment venues, are down 31% in foot traffic. 

Can we derive clues on the national economy from local trends?  After all, tourism, transportation and warehousing, and manufacturing are all key sectors for the region and might also convey signals about the national economy.  Across the five Southern Indiana counties that make up the Louisville Metro area, the latest data show that job growth cooled in the second half of 2023. In the first half of 2023, the five counties added 2,600 jobs per quarter, and growth slowed to an average of just over 700 jobs per quarter in the second half of the year. Both manufacturing and administrative and support and waste management and remediation services (primarily temporary labor services) shed jobs in the second half of 2023. Both industries are bellwethers for subsequent growth. Accommodation and food services, one measure reflective of consumer discretionary spending, saw a reduction in payrolls.

For the entire metro area, job growth has also slowed for the start of 2024.  The most recent data show that the year-over-year change in jobs, on a percentage basis, is the slowest since 2010, excluding the job losses that occurred with Covid. Manufacturing, retail, financial and professional and business services are seeing a reduction in jobs, and leisure and hospitality have also slowed.

Signs are beginning to emerge that consumers may finally be taking a break. This may be welcome news to the Fed, but elevated inflation will make it difficult to lower interest rates anytime soon.

Leading Active Nutrition Company Expanding Operations to Southern Indiana

1440 Foods to hire nearly 200, invest more than $60,000,000 at new Jeffersonville production facility.

Jeffersonville, IN (May 16, 2024)

1440 Foods, a leading portfolio of active nutrition brands, is bringing its main manufacturing operations to Jeffersonville, Indiana, along with nearly 200 jobs and new investment to the region.

The group will move into 301 Salem Road, in River Ridge Commerce Center, which formerly hosted Enjoy Life Foods. 1440 Foods will invest more than $60,000,000 into the building, including improvements to the existing structure and new machinery and equipment to make it a state-of-the-art facility for developing and manufacturing their products. 1440 Foods has committed to a long-term lease of the River Ridge property and plans to maintain a consistent presence in the community.

The facility is expected to begin production in 2025. A groundbreaking event is scheduled for Wednesday, May 22, at 3:30 p.m. EST.

Jointly owned by 4×4 Capital and Bain Capital Private Equity, 1440 Foods exists to provide people energy to unleash their potential through its innovative portfolio of healthy foods and supplements that are designed to support muscle development, recovery, and overall wellness goals.  1440’s portfolio combines powerful and complementary growth brands, including:

  • Pure Protein, a leading lifestyle nutrition line known for its bestselling portfolio of bars, ready-to-drink beverages, powders, and savory snacks; 
  • MET-Rx, a sports nutrition brand with over three decades of unwavering commitment to offering delicious meal replacement products which fuel workouts and optimize performance;
  • Body Fortress, a leading performance protein powder brand trusted by disciplined fitness enthusiasts to strengthen their bodies both physically and mentally.

“The opening of the Jeffersonville location is a significant milestone in our plan to make protein-rich snacking options accessible to as many people as possible,” said Alexandre Médicis, Chairman of the Board for 1440 Foods. “We considered several locations but found that Jeffersonville was perfect due to its proximity to major transportation channels and availability of a skilled and ready workforce. We look forward to becoming part of the Jeffersonville community, and we’re eager to expand our fantastic team in the coming months.”

Based on the company’s job creation and investment plans, the Indiana Economic Development Corporation (IEDC) committed an investment in 1440 Foods of up to $3.7 million in the form of incentive-based tax credits, up to $500,000 in training grants, and up to $200,000 in Manufacturing Readiness Grants. These tax credits are performance-based, meaning the company is eligible to claim incentives once area residents are hired.

1440 Foods has already begun hiring for leadership and administrative roles for the facility. Hiring for various production roles, including team leads, material handlers, packers, line operators, and other positions will begin later this year. Available jobs are posted on the company’s website, 1440Foods.com.  The facility will offer competitive benefits and wages, with all employees eligible to participate in the company’s annual bonus program. Wages will range from $18.50 to $33 an hour depending on position, skill, and experience.

“Indiana is the ideal destination for manufacturers and solution providers like 1440 Foods that need to quickly and efficiently reach customers across the country,” said Ann Lathrop, chief strategy officer at the IEDC. “Here in southern Indiana, 1440 Foods will find the pro-growth business climate, skilled talent and engaged business community needed to grow and be successful.”

“The City of Jeffersonville is excited that 1440 Foods has chosen the River Ridge Commerce Center as the location for their newest state-of-art manufacturing facility,” said Jeffersonville Mayor Mike Moore. “This significant investment is a great addition to our growing network of food and beverage industry partners, and we are confident they will find long-term success by employing 200 local residents at an average hourly wage of $33.”

“River Ridge welcomes 1440 Foods to our region,” said Executive Director of River Ridge Development Authority, Jerry Acy. “We are excited to see the investment that 1440 Foods will make in an existing industrial building and are pleased to have another industry leader within River Ridge.” 

“America Place is delighted to have 1440 Foods as part of our real estate area,” said CEO Jim Karp. “We are proud the improvements of our building captured the attention of such a great company as 1440 Foods and wish them continued success in their newest facility.”

“1si is thrilled to grow our robust ecosystem within the food and beverage industry with 1440 Foods,” said CEO and President of One Southern Indiana, Lance Allison. “They will be a great partner to have in the area and we look forward to supporting this new facility’s success in Southern Indiana.” 

About 1440 Foods

1440 Foods is a sports and active nutrition company on a mission to energize people to unleash their potential with a focused portfolio of accessible, great-tasting health and wellness brands: Pure Protein® nutrition bars; Body Fortress® high efficacy protein powders; and MET-Rx® high-performance meal replacements. 1440 Foods brands can be purchased online at Amazon, or at a wide range of grocery, pharmacy, and convenience store chains nationwide such as Wal-Mart, Target, Kroger, Meijer, Walgreens, CVS, and others. To learn more about 1440 Foods, visit www.1440Foods.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:
1440 Foods
Ben Adkins
BenAdkins@SoliloquyGlobal.com | 502-619-4267

One Southern Indiana
Brittany Schmidt, Manager of Programs, Events, and Groups
BrittanyS@1si.org  | 812-945-0266

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Economic Update | “Bad News”, and Stock Markets Surge

submitted by
Uric Dufrene, Ph.D., Sanders Chair in Business, Indiana University Southeast

Markets started the year anticipating six interest rate reductions by the Fed, while the Fed was proclaiming three. Continued moderation of the Consumer Price Index (CPI) along with Fed speak gave the markets confidence that 2024 would be the year of rate cuts.  Stock markets surged as a result.

A few columns ago, I offered that the narrative of “stagflation” would begin to enter the national scene. Stagflation is the combination of slower growth and inflation, or elevated prices.  This was reinforced with the first quarter GDP report showing quarter-over-quarter growth of 1.6%, along with CPI reports showing that inflation was greater than expected. Interest in the term “stagflation” surged on Google Trends, peaking during late April. The market went from pricing six rate reductions down to possibly two.   

All this changed with the national employment report released on May 3rd. Jobs added came in at 175,000.   While this would normally be considered a solid month, it was significantly under the market-expected level of 240,000 plus. A few weeks ago we talked about equity markets in search of “bad news”, and it hit the jackpot on May 3rd!   The average workweek declined to 34.3 hours, along with average hourly earnings. Along with the slowdown in payrolls, the unemployment rate increased to 3.9%, from 3.8% the prior month. Inferences from the national employment report were supported by a prior report on job openings, showing additional declines. The S&P surged more than 1% on this “bad news”. The weaker payroll growth put rate cuts by the Fed back on the table. Last week, new claims for unemployment ticked up to the highest level since August. The CME Fed Watch Tool is now showing the odds of the first Fed rate reduction in September, and another one in December, although with less than convincing current probabilities. 

There has been other “bad news” over the past couple of weeks. The ISM Services Index, a measure of service-side activity of the economy, unexpectedly declined to 49.2, signaling contraction in the largest part of the economy. During the pandemic, the service side of the economy had cooled considerably, as consumers flocked to goods spending. Since then, goods spending moderated, and services fueled economic growth. The ISM Services Index has been under 50 in only three different periods since 2009:  April and May of 2020, December 2022, and the last reading. The index happened to be released on the same day as the employment report, and this was additional “bad news” for the positive stock market response. 

Survey data have also cooled over the past few weeks.  The Small Business Optimism Index has been declining since December and is now at the lowest level since late 2012. Respondents point to inflation as the top business problem. Measures of consumer optimism have also waned.  The Conference Board consumer confidence measure, which leans more on employment and job security,  declined to 97, less than the market consensus and lower than the prior month of 103.1 The University of Michigan consumer sentiment measure, which is aligned more with consumer finances, plunged to 67.4, under the expectation of 76.5 and lower than the prior month of 77.2.

Locally, employment across the five Louisville Metro Southern Indiana counties (Clark, Floyd, Harrison, Scott, and Washington) is down from last year. This measure of employment is not necessarily country-specific. That is, the place of employment could be outside the five counties, in Kentucky, for example. So, negative changes in employment in the five counties do not necessarily imply that jobs are shrinking in these specific counties. But here is an interesting observation of negative year-over-year changes in Southern Indiana employment. In the last 30 years, a negative change in employment is usually associated with a recession, either a year or so before or during. A negative year-over-year change in employment occurring without a recession happened only once, and that was in 2004.

How fast conditions can change!  Since as recent as the third week of April, the Dow, S&P, and NASDAQ are all up around 5%, reversing losses of the prior month. The market is getting the bad news it was seeking, and now interest rate cuts will need to materialize to sustain gains. The problem with cuts is that a weaker economy is usually the cause.    

Economic Update | Higher Mortgage Rates…For Now

submitted by
Uric Dufrene, Ph.D., Sanders Chair in Business, Indiana University Southeast

As last year ended, the market was expecting several rounds of interest rate cuts. The Fed alone had indicated it would reduce rates three separate times over 2024, and the market was expecting double that. It was around October of 2023 that Fed Chair Jerome Powell uttered that the Fed was about done hiking rates. Equity markets rejoiced and began a 4th quarter surge. From October 2023 to March 2024, the S&P 500 added more than 300 points, increasing by about 28%. The tech-heavy NASDAQ increased by 30%. Since late March and through April, we’ve seen an abrupt reversal. The S&P 500 trimmed 5.5% and the NASDAQ is already down 7%. The culprit is linked to inflation. 

Higher inflation puts upward pressure on the 10-Year Treasury yield, the benchmark for consumer financing costs, including mortgages. In early 2024,  the yield had declined to 3.88 percent. After a series of higher-than-expected inflation reports, the 10-Year Treasury yield is almost hitting 5%, closing at 4.61% last week. Higher rates are supposed to suppress demand because it ultimately affects the cost of financing for both business and consumer loans, including mortgages.    

After hitting almost 8% for a 30-year mortgage in October 2023, mortgage rates had been on a decline since then and hit a recent low of 6.7% in late 2023.  Since the higher-than-expected inflation reports and the upward trajectory of the 10-year Treasury yield, mortgage rates have been climbing since December and have since crossed 7% in April. Excluding the time when rates surpassed 7% late last year, 7% mortgages last appeared in the early 2000s. Rates remaining above 7% will adversely impact building activity, exacerbating the housing supply problem, and placing continued upward pressures on home prices. One of the key reasons for higher inflation is linked to housing, with the last CPI report showing the cost of shelter increasing by 5.7% from the previous year. 

Another reason for higher rates is a continued strong economy. Inflation pressures remain, but higher yields are also driven by a very resilient macroeconomy, driven by the consumer. The last retail sales report showed strong continued spending by consumers, placing additional upward pressure on the 10-year yield. While consumers continue to spend, there are emerging signs of distress.  Delinquencies on credit cards are the highest since 2012, and consumer loan delinquencies now exceed the pre-pandemic level.   Thirty days past due delinquencies for 30-year mortgages have also been increasing since hitting a bottom in June 2021, and are at the highest in four years.

The preferred Fed inflation gauge will be out this month, and the FactSet consensus is for a year-over-year rate of 2.6%, with a core (inflation minus the cost of food and energy) reading of 2.7%. If actual rates come in higher than expected, we can expect significant additional stock market choppiness and additional upward pressures on the 10-year yield.  If it is indeed a hotter number, we will see a growing narrative for another rate hike this year, and equity markets will shed additional losses. 

What will it take to reverse the recent climbs of the 10-year yield? A weak employment report would be a significant boost to lower rates, along with softer inflation readings. Weaker average hourly earnings increases, along with a reduction in the number of job openings would also work to reverse the climb of the 10-year. All this sounds like bad news, and that is exactly what markets would like to see.  Bad news would put the Fed back on a schedule of rate reductions, and markets would rally. The best combination is weaker inflation reports, along with employment that remains resilient. This would put the nation’s economy back on track for a soft landing. 

Economic Update | Fewer Interest Rate Cuts This Year

Coming into 2024, stock market investors were expecting 6 interest rate reductions by the Fed throughout the year. Year-over-year inflation had fallen, and Federal Reserve officials had signaled that cuts would likely begin this year. Inspired by lower interest rates, the stock market surged. In late October 2023, the S&P 500 Index was at 4,117. Fast forward to early April 2023, and the S&P was over 5,200, representing a 26% gain since the October low. While the market was expecting six rate cuts, the Fed had signaled only three for 2024. Market expectations and sentiment dominated the Fed view, and markets continued climbing.   

The impetus behind lower rates was tied to inflation. At the start of 2023, the Consumer Price Index registered a year-over-year change of 6.6%. In October, when the market began its surge, the CPI had declined to 4.0%. In three quarters, inflation was trimmed by 2.6%. Since then, the progress on inflation has slowed considerably. From October 2023, when the market began its upward trajectory, the CPI is only lower by a magnitude of only .08. Basically, the CPI has been stuck just above 3%, not quite at the level of the Federal Reserve target of 2%.   

Since disinflation has basically come to a halt, the market is now pushing the first rate cut back to July, with mixed probabilities for additional cuts beyond July. The last Fed Reserve meeting in March continued to point to three cuts for this year, but that was by a very slim majority. In that meeting, the Fed upped growth estimates of the economy and its inflation projections yet maintained an estimate of three cuts for 2024. Some suggested that this was counter-intuitive;  higher inflation estimates, but no change in rate reductions. Since the Federal Reserve March meeting, some Fed officials are on record calling for fewer than 3 cuts:  one recently calling for none, and a historically dovish one calling for only one cut. The yield on the 10-year Treasury is knocking on the door of 4.5%, up from 3.9% at the start of the year. This will keep interest rates on credit cards, auto loans, and mortgages higher for longer. 

By the time you may be reading this, the latest CPI report will have been released (release is scheduled for Wednesday, April 10th). If we get a hot CPI number, meaning it comes in higher than expected, this will push interest rate reductions back even further. Markets will likely reduce rate reductions from 2 to perhaps one, or none. The stock market will likely be volatile. If the CPI comes in less than expected, markets will likely surge. One of the reasons for this surge started with last Friday’s U.S. payrolls report. The U.S. employment report was indeed a Goldilocks report. Jobs created surpassed all expectations, with the economy adding 303,000 jobs in March. Both the labor force and labor force participation rate increased by sizeable margins. Household employment also surged, reversing previous declines. Average hourly earnings slowed from the previous month, a key ingredient for the softer inflation story. The average workweek also increased, which when combined with the number of jobs and average wages, points to more fuel for the spending consumer. 

Locally, Louisville Metro is seeing the slowest job growth since early 2020. Preliminary estimates from the Bureau of Labor Statistics show that Louisville Metro gained 3,500 jobs from February 2023 to February 2024. As a comparison, the metro area added approximately 15,000 jobs on an annual basis in early 2023. On a percentage basis, this puts Louisville Metro last among the Kentucky metro areas.  In Indiana, three metro areas (Bloomington, Columbus, and Elkhart-Goshen) are observing negative changes in payrolls from the prior year. As we have discussed in previous columns, both states continue to face labor force growth challenges. The latest BLS metropolitan employment report showed that Louisville Metro also saw a decline in the labor force from the prior year.  To be sure, these data are subject to revision, but the early data does show a slowing of job growth in the metro region. 

Economic Update | Has the Soft Landing Come and Gone?

submitted by
Uric Dufrene, Ph.D.,  Sanders Chair in Business, Indiana University Southeast

The monthly national jobs report released showed another big gain in job creation.  The Bureau of Labor Statistics report showed that the nation’s economy gained another 275,000 jobs during February,  much higher than consensus estimates of 200,000. Revisions from the prior two months did show that payrolls were reduced by a combined 167,000, pointing to some softness in previous strong reports. While the overall report was favorable, looking beyond the headline numbers can find potential clues on the overall trajectory of the economy. 

While the headline 275,000 jobs number from the survey of establishments was favorable, numbers from the household survey pointed to potential concerns about the economic outlook. Employment declined by 184,000, and this marks another consecutive decline since November 2023. Since November 2023, employment has declined by nearly 900,000. The decline in employment showed up in the uptick in the nation’s unemployment rate, from 3.7% to 3.9%. The increase in the unemployment rate was due to an increase in unemployed workers of 334,000. Since the same time last year, the number of unemployed workers has increased by close to 500,000.     

Examining unemployment rates by occupation might also offer signs about the economy. The unemployment rate data by occupation is non-seasonally adjusted. So, we need to examine the year-over-year change in the unemployment rate to ascertain any relevant information about potential trends. One occupation with signaling potential is sales and related occupations, with the unemployment rate usually undergoing a noticeable change prior to and during a recession. Simply speaking, employers need more sales-related occupations when an increase in sales is anticipated and need fewer on the converse. The unemployment rate for sales-related occupations increased from 4% of February last year to 4.7% in February 2024. In the tech-led recession of 2001, the unemployment rate for sales occupations increased from 3.3% to 4.9% just prior to the recession’s start. The Great Recession did not see any declines in sales-related occupations until the actual start of the recession, with the unemployment rate increasing from 5.2% to almost 9% by the end of the recession.  While the current change is a noticeable uptick, we need to see sustained increases for definitive conclusions on growth projections and more conclusive statements on any pending recession.

One industry that can provide potential hints on the economic trajectory is professional and business services, specifically temporary employment services.  As the economy heats up, employers will first expand with temporary labor. To the contrary, when employers are anticipating or experiencing declines in economic activity, temporary workers are usually the first to experience layoffs. Temporary labor services are part of the professional and business services sector, and the unemployment rate has increased from 4.2% to 5.1%.  Just as recently as October 2023, the unemployment rate in professional and business services was 3.2%.  Additionally, the February jobs report did show a decline in temporary labor services of 15,400. As a comparison, the 2001 recession saw the unemployment rate in professional and business services increase from 4.1% to 5.9% just prior to the economic slowdown. For the Great Recession, professional and business services saw an increase in unemployment from 4.8% to 6.4%. There has been a noticeable increase in unemployment, but still not the kind of changes that might coincide with a recession. This is another number that warrants watching. 

My economic outlook for 2024 called for “slower growth” and a pullback in consumer spending. We are seeing emerging signs of softer growth along with consumer spending, but we are not close to calling for a recession. Over the next several months, we will hear more talk about various forms of stagflation, a combination of higher prices and slower growth. As the inflation rate approaches the Federal Reserve’s desired level of 2%, getting from 3 plus percent down to 2% is facing headwinds, implying that interest rates will be higher for longer.  The soft landing may have come and gone as the  “last mile” of inflation remains stubborn, and signs of softer growth emerge. 

Charging Up: Global Technology and Engineering Provider Coming to Southern Indiana

MKS Global, an ISO 2013-certified company, is opening operations in Jeffersonville.

Jeffersonville, IN. (March 4, 2024)

MKS Global, Inc., is expanding! The global technology and engineering provider will move to a new location to grow its production capacity, including new production with aerospace maintenance technology and electric charging stations. The company will invest over $2.8 million into the region by leasing a building on Centennial Boulevard in Jeffersonville and purchasing new equipment. The location will also add up to 40 new jobs at an average wage of over $45.00 per hour, with the company providing training for each employee. The new facility will also serve as the company’s headquarters for the U.S.  

MKS Global, Inc., is a global technology partner with a full spectrum of IT, digital technology and engineering services with supply chain resources that support a variety of industries, including health care, information services, aerospace, automotive, and other technology manufacturing. With a focus on providing services that enable businesses to reach their goals, MKS Global has a 98% referral rating and a presence in six countries.

“Our team couldn’t be more optimistic about the future as we establish Jeffersonville, IN, as our headquarters and newest facility for MKS Global,” said CEO William Moon. “This new location affords us an abundance of growth opportunities by dramatically expanding internal prototyping capabilities. This investment will accelerate innovative product partnerships in a variety of high-impact industry sectors such as automotive, aerospace, renewable energy, and beyond.”

Based on the company’s job creation plans, the Indiana Economic Development Corporation (IEDC) committed an investment in MKS Vision Group, Inc. of up to $800,000 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.

“Southeast Indiana is quickly growing its reputation as a premier destination for technology providers and technology-enabled firms thanks to the investment of companies like MKS Vision Group,” said Ann Lathrop, chief strategy officer at the IEDC. “As a state, we are committed to supporting this expanding ecosystem through our partnerships with regional leaders and through strategic investments in innovation, community development and talent, paving the way for continued economic growth and career opportunities for years to come.”

“The City of Jeffersonville enthusiastically welcomes MKS Global to our growing community of innovative technology-driven companies,” said Jeffersonville Mayor Mike Moore. “This facility will include a state-of-the-art prototyping center, supporting a number of high-growth industries and creating 40 new jobs with an average wage above $45 per hour which is nearly double the Clark County average wage.”

“MKS Global’s investment further recognizes the regional advantage we offer to industry partners,” said John Launius, Vice President and Director of Economic Development at One Southern Indiana. “We are confident MKS Global will find continued success by offering premium product design and engineering services, now leveraged with increased prototyping capabilities which make them an ideal industry partner.”

About MKS Global, Inc.

MKS Global is a solutions company, combining global network engineering, digital technology, and supply chain expertise with a focused partnership experience. They exist to provide increased efficiencies and flexibility that accelerate business performance by adapting the latest cutting-edge technologies for their customers. Their services deliver tangible benefits with efficiency and agility. For more information, visit www.mksglobal.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:

MKS Global, Inc.
Andrew Brinker, General Manager
Andrew.brinker@mksglobal.com
810-434-0820

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

Economic Update: Latest County Jobs Show Speed Bump; Challenges in Transportation and Warehousing

submitted by
Uric Dufrene, Ph.D.,  Sanders Chair in Business, Indiana University Southeast

Coming out of Covid, the Southern Indiana economy has been seeing some of the strongest job growth in the past 20 years. Not counting the outsize numbers that occurred during 2020 and 2021, the past several quarters have generated some of the most impressive job gains. There was only one other period in the past 20 years where job gains were higher,  2015 and early 2016. Manufacturing, retail trade, and administrative and support, waste management, and remediation industries were the largest contributors to job growth during that period.     

New data are out at the county level, and it showed a noticeable deceleration in job growth for the five Southern Indiana counties of Clark, Floyd, Harrison, Scott, and Washington. This is a rear view of the economy since county payroll data have about a 6-month lag but can contain some useful information about the current state and trajectory of the economy. For the 3rd quarter of 2023, the Southern Indiana region gained 544 jobs compared to the previous year. Throwing out the Covid-related job losses, this would be the weakest since the 3rd quarter of 2019.   

When we break job activity down by industries, we see that the greatest losses occurred with industries that had the strongest gains during the high job growth year of 2015. Both manufacturing and administrative and support, waste management, and remediation (temporary labor services falls in this industry) suffered the largest job losses, losing 745 and 1,159 jobs respectively. Health care and social services added the most, boosting payrolls by 1,185.  For the four quarters leading up to 2023:Q3, health care was the dominant job creator across Southern Indiana.   

Transportation and warehousing saw another drop in payrolls. Back in 2021 and 2022, transportation and warehousing led all industries in job growth across the region. The nation’s economy saw a goods spending bonanza, driving demand for transportation services to carry goods from manufacturers to the consumer’s doorstep. The latest data show that the strong gains in transportation and warehousing had vanished, with the industry seeing negative changes for three consecutive quarters. 

Strong growth in transportation and warehousing was not just a Covid effect.  Back in 2018, transportation and warehousing saw job gains that exceeded 2,000 for four consecutive quarters. For 10 quarters up to 2023:Q3,  the average job change in transportation and warehousing was just 125 jobs. This almost standstill in transportation and warehousing is linked to both challenges and opportunities coming out of Covid. Record-breaking goods spending by consumers, along with all-time highs in freight rates, invited more trucking capacity and this necessitated the hiring of workers. This explains the large increase in transportation and warehousing jobs back in 2022. 

Since then, consumers have shifted more spending back to services, while freight rates have declined to levels that existed back in 2021, after hitting a record peak in 2022. Declining freight rates, along with current excess capacity in the industry have contributed to what some referred to as a “freight recession”. Local numbers in transportation and warehousing reflect part of this slowdown.     

Despite these challenges, truck driver occupations are still among the highest in job postings. A closer look, however, shows that job posting intensity, a measure of how hard employers work to fill positions, is the highest across all job postings and higher than the regional average. It was difficult to fill truck driver positions prior to Covid, and this difficulty has only intensified since.

Other areas of weakness in the 2023 3rd Quarter release dealt with wages.  Average weekly wages declined by $20, but more concerning was the decline in total wages for the region, the first decline since the 2nd quarter of 2020, the start of the Covid recession. Three industries contributed to the overall decline in wages:  manufacturing, transportation and warehousing, administrative and support, waste management, and remediation services.   

The 3rd quarter of 2023 turned out to be a slower period for Southern Indiana, consistent with the subdued growth expected in our 2023 economic outlook. There is a macroeconomy explanation to this 3rd quarter story. National manufacturing was in contraction all of 2023, and transportation and warehousing are still feeling the effects of a Covid boom and subsequent bust.    

We move to the national jobs report this Friday, the Super Bowl of economic indicators.  Watch for the size of the monthly job gains, changes in average hourly wages, and labor force growth. All will provide additional clues about inflation pressures, and subsequent actions, including delayed rate reductions, by The Fed. 

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.