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(INDIANAPOLIS) – IU economists expect the trade war to take a bite out of the economy next year.

The Kelley School of Business annual forecast predicts “anemic” growth for the Indiana economy, at 1.25{46ff1f14221e6e90aab6104ff16614ca22b12c1f029f774ee196565ca96b3af3}. The national forecast is only slightly better, at 2{46ff1f14221e6e90aab6104ff16614ca22b12c1f029f774ee196565ca96b3af3}.

Economist Kyle Anderson says the trade war has begun to take a toll on the economy. Back-and-forth tariffs are driving up costs along the supply chain. And Anderson says the erratic way trade policy is being carried out, with tariff threats giving way unpredictably to trade truces and back again, creates the kind of uncertainty that makes companies sit on their capital instead of investing it. 

Indiana’s manufacturing-heavy economy makes the state’s economy more vulneraable to supply-chain disruptions.

The Kelley School’s Business Outlook Panel expects unemployment to hold steady at less than four-percent. Anderson says unemployment is traditionally a lagging indicator. If economic growth really does slow down as much as predicted, he says it’s likely next  year’s forecast would anticipate job losses in 2021.

Anderson says political uncertainty compounds the economic uncertainty. He says President Trump’s potential impeachment creates an additional question mark for the economy. And he says the economic proposals of some of the Democratic presidential contenders are likely to alarm the market, potentially leading to a general-election faceoff where businesses have deep concerns about both nominees.

Through the first half of 2019, Indiana has lagged behind IU’s forecast of 3.2{46ff1f14221e6e90aab6104ff16614ca22b12c1f029f774ee196565ca96b3af3} growth for this year.

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