Economic Update | Higher Mortgage Rates…For Now

by with No Comment 1si NewsEconomic Development

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

by with No Comment 1si NewsEconomic Development

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?

by with No Comment 1si NewsEconomic Development

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

by with No Comment 1si News1si Press ReleaseEconomic Development

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

by with No Comment 1si NewsEconomic Development

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?

by with No Comment 1si NewsEconomic Development

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?

by with No Comment 1si NewsEconomic Development

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

by with No Comment 1si News1si Press ReleaseEconomic Development

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

 

###

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

by with No Comment 1si NewsEconomic Development

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

by with No Comment 1si News1si Press ReleaseEconomic Development

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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