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What can we expect from Indiana’s economy in 2022?

COVID-19, labor shortages and supply chain issues will continue to challenge Indiana’s economy in 2022, although the state will remain reasonably resilient.

That’s the prediction made Thursday morning by Indiana University economists during the Kelley School of Business’s annual Business Outlook, a forward-looking report on how the state and national economies will perform over the next year.

“We are still an economy recovering from pandemic-related challenges,” said Kyle Anderson, clinical assistant professor of business and faculty chair for the Evening MBA program. “The way these challenges play out now is supply-side bottlenecks – disruptions in the supply chain and challenges in the job market.”

Typically, what h -pens in Indiana reflects the national economy. However, there are some key differences in the forecast for the next year.

The downtown Indian -olis skyline is pictured on August 14, 2019.

Economists say Indiana has better employment than the country. And while the state is experiencing growth in income and production similar to that of the nation, that growth is taking place at a lower level.

This will continue into next year as Indiana continues to recover from the pandemic. Economic growth is expected to be higher in the first two quarters of the year, but lower than in the second and third quarters of 2021.

“We expect continued employment growth and job creation of about 2%, similar to national growth,” said Jennifer Lynn Rice, senior lecturer in business and public policy at Indiana University. “We expect to be creating new jobs every quarter, but we will still see a labor shortage as we do at the national level.”

The Kelley School of Business forecast projects the U.S. will create an average of about 300,000 new jobs per month in 2022, compared to the average rate of 450,000 new ones Jobs per month for the past 12 months.

“This will be about two-thirds of last year’s rate, but it will be enough to bring year-end employment above pre-pandemic levels,” said Bill Witte, author of the Kelley School’s US Forecast and associate professor emeritus of the Economy, it says in a statement. “Total employment remains 4.5 million below pre-pandemic levels.”

Indiana workers do not  -ply for low-wage jobs. So the governor cut unemployment.

The deficit reflects a decline in labor force participation. Rice found that the US labor force participation rate is around 61%, while the Indiana rate is around 63%, which is higher than all neighboring states.

Although the labor force participation rate in Indiana is still slightly higher than the national rate, it is still lower than what the state has seen in the past. Economists said around 60,000 Hoosiers dropped out of the job market over the past year, meaning fewer people are looking for jobs.

Experts attribute this to a variety of reasons, including: For example, retirement, return of workers to school or training programs to acquire new skills, women who leave their jobs to care for children and people who are selective in their work because of incentive savings.

“During the shutdown, the participation rate fell by 3.2 points – a very big change,” said Witte in a Opinion. “It recovered almost in half during the first four months of the restart, but has made no further progress in the 14 months since the restart.”

Emigration has created a shortage of available labor when labor demand is high. Such bottlenecks have caused some businesses – restaurants, retailers, and pharmacies in particular – to close early or limit their operating days to accommodate.

The labor shortage is also affecting Indiana’s growth and the pace of recovery from the country Pandemic.

US $ 15 is the new starting hourly wage in Indiana

“You have fewer people looking for work, the decline in truck drivers, the impact and disruption to logistics and transportation, “Rice said.” Indiana is caught up in this bottleneck in the supply chain – these logistical disruptions to shipping. “

Ongoing challenges are limiting the economic growth of Indiana and the nation. The growth in GDP and overall economic output in the third quarter was not as high as economists had hoped, partly because of the delta variant and supply chain problems.

“Between the Delta option and delivery issues that we didn’t expect, we probably haven’t recovered as quickly as we’d like,” said Anderson, adding that despite the growth, the challenges remain despite the country is changing no longer is in a recession occurred.

Economists expect the following in 2022:


Economists assume that inflationary pressures will continue into the new year.


Indiana will continue to create jobs, but not as high as 2021 and lower than predicted before the pandemic. The labor shortage is expected to remain a major problem for many companies and exacerbate problems in the supply chain.

“Part of the reason we’re seeing slightly lower employment growth and job creation in Indiana compared to national levels is because Indiana tends to have slower population growth,” said Rice.

The state’s unemployment rate will continue to fall, from currently around 4.2% to a low levelto 3.6% by the end of 2022. More people will enter the labor market, but that number will decrease in the second half of the year.

Manufacturing and the service sector

Growth in the services industry is expected to fuel the state’s manufacturing over the next year, while manufacturing, a key sector, will lag behind in Indiana.

The service sector will grow by around 2.6%, with healthcare, business services, and leisure and hospitality being the most important areas for job creation and employment. The latter is being driven by the events in Indian -olis, where the tourism and convention business is expected to pick up in 2022.

In manufacturing, economists expect slower growth in this sector and forecast growth of only 0.44%. This is worrying for Indiana, a manufacturing-oriented state.

The reasons for the low job growth are mixed, Rice said, noting that labor shortages, supply chain and trucking issues are affecting the sector. The creation of jobs in manufacturing often lags behind production, which can be good or bad.

In some ways, Rice explained, this would indicate higher labor productivity or mean employers are accelerating their transition to automation and technology to maintain or increase production amid the ongoing labor shortage.

In this sense, technology could replace human labor.

Conveyor belts will be assembled at Bastian Solutions on Tuesday, March 9, 2021 in Westfield.  The company manufactures conveyor belts and other equipment for distribution centers.  With the quarantine and people buying more things online, sales customers were demanding more from Bastian, who now has a work backlog and not enough staff to fulfill orders.

Supply chain problems

It is pretty certain that the supply chain disruptions will last until 2022.

“They won’t be resolved by the end of the year. We were all hoping it would be resolved and everyone would get their Christmas presents for the holidays,” said Rice. “Don’t get too high hopes, (that) will likely lead to more expensive holiday celebrations this year.”


Indiana saw significant income growth in the second and third quarters of this year, in part due to state incentives, but that growth has slowed.

“The stimulus packages and payments really boosted income growth in early 2021,” said Rice. “The end of those incentives there in September really started to dampen that growth, although we continued to see some growth.”

However, compared to the national level, Indiana has historically seen lower income growth. Rice said this pattern is expected to continue through 2022.

“Although we have income growth, it will not be as big – all that big or a little lower – than we see it nationally,” she said.

The Skyline Club is located on the 36th floor of the One American Building in downtown Indian -olis, Wednesday, December 2, 2020. The club is now open to the public for a limited time to allow Hoosiers to complete the new $ 2 million renovation of the South east side of the restaurant.

Downtown Indian -olis

Downtown Indian -olis has yet to fully recover from the pandemic as many workers continue to do their jobs from home or other remote locations.

Circle Center Mall, a major attractionfor the lost several high-profile chains in the past year. Restaurants are closed. Many of these companies depend on tourism and office workers, Anderson said.

“Downtown Indian -olis has been overly dependent on commuters and people who come and work Monday through Friday 8:00 am to 5:00 pm, which is a lot of restaurants and lunch spots that were demogr -hic,” said Anderson. “Some of the people will come back, but there has to be more balance, like having more residents down there around the clock.”

This can be a mix of tenants or homeowners living in high-rise or row houses.

Investing in permanent home ownership will help Drive will help support future downtown growth, Anderson said, adding that it is up to the city government to study how residential growth in remote areas can be replicated in the core of the city.

Contact IndyStar reporter Alexandria Burris at [email protected] or call 317-617-2690. Follow her on Twitter: @allyburris.

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