National and international factors will affect the Columbus area’s economy next year, although the extent isn’t fully clear yet, said a panelist who will participate in an economic forecasting event in Columbus next month.
“The economy of Columbus is linked to the greater region and world,” said Ryan Brewer, IUPUC associate professor of finance, who will present the Columbus area forecast during the annual Business Outlook Tour by the Indiana University Kelley School of Business.
Brewer said he was referring to business relationships that Columbus companies have with China, as well as free-trade agreements.
The IU tour will make a stop locally from 7:30 to 9 a.m. Nov. 9 at the Columbus Learning Center, 4555 Central Ave. The Kelley School of Business has presented its national, state and local forecasts via a series of presentations in cities throughout Indiana since 1972.
Because of ties to the trucking and automotive markets, the local economy is impacted by multinational economic health, Brewer said.
Although the U.S. has sustained a tepid economic recovery, the rate of recovery has been a little bit more impressive of late, Brewer said. However, multiple factors could send a shock to the national economy that, for better or worse, would have a ripple effect locally, he said, including:
- Tax reform
- International conflict
- The rate of increase in the interest rate in concert with the national debt
- Possible changes to the North American Free Trade Agreement (NAFTA)
- Possible changes to the Deferred Action for Childhood Arrivals (DACA) program
Brewer said his conclusions about the local forecast will become more clear when he receives updated information regarding the impacts of hurricane damage in the U.S., which has affected the construction and auto industries.
Indiana and Columbus have strong ties to the auto industry, Brewer said.
The starting point for the annual forecast is an econometric model of the United States, developed by IU’s Center for Econometric Model Research, involving hundreds of statistical equations to develop a national forecast for the coming year, according to the university.
A similar econometric model of Indiana provides a corresponding forecast for the state and its metro area economies, based on the national forecast and data specific to Indiana. The Business Outlook Panel then adjusts the forecasts to reflect additional insights the panelists have on the economic situation, it said.
Each fall, business and government leaders plan for the coming year, but this year is a bit different, said Jerry Conover, director of the Indiana Business Research Center.
“The task is even more challenging than usual this year, given wrangling between Congress and the White House over federal tax and health care policies, treatment of foreign corporate income and so on,” he said.