IUS Times

Economic Outlook Breakfast Brings Record Crowd

"Guardedly optimistic" were the words of the day during Economic Outlook 2007, an annual event held at IU Southeast on November 14.

The economic outlook breakfast has become the de-rigueur event for Southern Indiana business professionals eager for a glimpse of the future economic landscape. This year's event was no exception, and the Hoosier room was filled to near-capacity with over 325 business community leaders.

Discussions following the breakfast started with a look at the national and international situation. James C. Smith, senior lecturer in finance at the IU Kelley School of Business led that discussion. He noted that while the 2006 outlook was "sunny," things could change quickly.

Economic indicators don't indicate a recession," said Smith, "but some type of 'external shock' could change things dramatically."

The next agenda item during the event was an analysis of national financial markets led by William L. Sartoris, professor of finance at IU Bloomington and director for both the MBS Investment Banking Academy and the MS in Finance Program at the Kelley School of Business. Continuing the "cautiously optimistic" theme, Sartoris estimated that inflation would be no more than 3%, well within historical norms.

Sartoris also shared a surprising statistic regarding personal savings. He said that last year Americans saved minus 1.7 percent of their income compared to an annual savings rate of about 12% of personal income in the 1980s. This failure to save for a rainy day could have serious consequences in the event of an economic downturn, Sartoris explained.

Morton J. Marcus, director emeritus of the Indiana Business Research Center at the Kelley School of Business, presented the economic forecast for the state of Indiana. Marcus noted that Indiana suffered from "ongoing sluggishness" and a failure to keep pace with the rest of the nation in critical areas such as growth in personal income. He also noted that 79% of all new jobs in the state of Indiana during the past 10 years have been in the Indianapolis metropolitan area.

Following Marcus was Uric Dufrene, Judge Carlton and Sue Sanders Chair in Business and former Dean for the IU Southeast School of Business. Dufrene helped attendees understand what to expect on the local economic level. He noted that although job growth is up in Floyd and Clark counties, almost all of these new jobs are in retail, and there are actually fewer jobs in Southern Indiana's rural communities.

Dufrene said that his outlook for Southern Indiana was "guarded" and expressed concern over the sharp drop in new housing permits and a corresponding decline in construction.

All of the presenters during the breakfast cited unstable energy prices as a major risk factor for all areas of the economy. To learn more about the economic forecasts presented during Economic Outlook 2007, see the December 2006 issue of Indiana Business Review. It can be found online at www.ibrc.indiana.edu/ibr.

Chris Bjornson, interim dean of the IU Southeast School of Business, said he was pleased with the turnout and audience participation at the breakfast. "Even though we had a large crowd, it didn't seem to inhibit discussion," said Bjornson.

"After all of the presentations, we explored some additional areas--such as a Clark County casino--that were outside of our agenda but provoked some very interesting dialogue," said Bjornson.

Economic Outlook 2007 was hosted by the IU Southeast School of Business and the Kelley School of Business and sponsored by First Harrison Bank.

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