The panel spoke to various Johnson County business personnel. From left to right: Carol Rogers, Ankit Kalda, Jennifer Rice, Phil Powell.
Waylon O’Donnell | Daily Journal
Economic industry professionals spoke at Aspire Johnson County’s Economic Outlook Breakfast Wednesday morning, frequently discussing the impact of student loan repayment on consumer spending.
Phil Powell, executive director of the Indiana Business Research Center, provided county business professionals with an updated economic forecast and introduced a panel of economic experts.
The panel included Jennifer Rice, senior lecturer at Indiana University, Ankit Kalda, assistant professor of finance at IU and Director of the Indiana Business Research Center at IU Carol Rogers.
County, state economic outlook
Johnson County is one of the best places to live in the state of Indiana, economically speaking, said Powell.
“Johnson County has amazing momentum and will continue to vault ahead in 2024,” he said. “Johnson County is probably the fastest ascending county in the state. It is a needed economic anchor right now for a metropolitan area that is honestly struggling.”
Since 2007, the United States’ GDP per capita has grown 14%. Indiana grew 7%, while the Indianapolis metropolitan area grew only 1%. However, Johnson County’s GDP per capita grew 23%, said Powell.
He also noted that unemployment in Johnson County is currently 2.8%. However, income in the county is about two-thirds the state average. The average weekly wage in the county is $938 compared to the state’s average of $1,203, he said.
“Johnson County is catching up, but it has a long way to go just to catch up to the rest of the state,” said Powell. “The best thing you can do for your business these days is invest in your people and your culture.”
Rice has noticed a strong labor market in 2023, an increased amount of created jobs, an increase in the labor force’s participation, a lower unemployment rate than expected and even a slight decrease in inflation.
Rice predicts an additional decrease in inflation in 2024 as well as slower job creation and a slight increase in employment. Geopolitical tensions are something to watch, especially in Ukraine and Russia, as they could cause supply chain disruptions and higher commodity prices which could contribute to an inflation increase, she said.
Rogers mentioned Indiana’s population growth and the size of the state’s workforce.
“It has been a positive two or three percent each year,” said Rogers. “Much of that has been from international immigration, as well as domestic migration into Indiana. Johnson County has seen that happen as well.”
One of the challenges is that baby-boomers are aging out of the workforce, and there is a need for workforce retention. However during the past year, Indiana’s labor force has picked up strength, she said.
The state will also reach an important milestone in 2024 when the labor force size reaches about 3.5 million people. Indiana’s total population is 6.8 million.
“We really want to see the labor force be about half of the total population,” said Rogers. “That is a sign of strength for us.”
Student loans impact spending
In the past year, the United States economy was much more resilient than expected, notching a 2.3% growth rate, said Rice. The main reason for the continued growth is consumer spending, which is expected to fluctuate in 2024.
Rice credits a few key factors in why Johnson County may see a decrease in consumer spending: the COVID transfer payments that many people put into their savings account are beginning to diminish; there is a higher cost of living; restricted credit availability; the termination of child care expense; the resumptions of student loan payments.
“A lot of the spending today is credit-based,” Rice said. “It can’t be sustainable. Moving forward into 2024 and 2025, we have these people with a large amount of credit card debt who also may be starting to pay school loans. They’re not going to be able spend. If they don’t have the income to service that credit card debt, or continue to live with that credit card debt, it is going to cause individuals to reduce their consumer spending, which would be a downside to our potential growth. I think we will see in 2024 a slowing in consumer spending in the first couple quarters. It’s definitely going to have an impact.”
Ankit Kalda said that consumer spending is not a big problem as long as the individual’s debt is at a manageable level and their household is avoiding distress. He said that student loans will affect consumption more than credit card debt.
“The student loan repayment issue is going to have a big effect,” said Rogers. “There are a lot of people in Indiana who have a significant amount of student loan debt.”
The amount of student loan debt is evident when you take into account that young people are postponing having families until their late 20’s or into their 30’s, she said. The younger generation is also more likely to rent as opposed to purchasing their homes.
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