KOKOMO, Ind. — An investment of more than $5 billion in two electric-vehicle battery plants in Kokomo will be the engine of growth for the local economy.
Now, the city of Kokomo and Howard County quickly must bring in developers to provide the housing needed for the anticipated 3,000 jobs the new plant brings to the community.
Dmitriy Chulkov, Indiana University Kokomo professor of business analytics and economics, and Kokomo Mayor Tyler Moore discussed the impact and challenges of the StarPlus Energy joint venture, brought to Kokomo by Stellantis and Samsung SDI, at the Futurecast economic outlook tour presented by the IU Kelley School of Business on Tuesday.
In addition to Chulkov and Moore, the panel included Mark Frohlich, associate professor of operations management, Chad Ham, associate professor of accounting, and Timothy Slaper, research director, Indiana Business Research Center. Chittibabu Govindarajulu, dean of the IU Kokomo School of Business, served as moderator.
Chulkov noted that the Kokomo Metropolitan Statistical Area (MSA) was behind the rest of Indiana in employment growth in 2022 to 2023, but that trend is expected to reverse in 2024 to 2025.
“The major new investment by Stellantis, as well as the re-tooling of existing facilities is expected to provide positive impact on the region’s employment and wages in 2024 and beyond,” he said.
Kokomo is anticipated to show four percent annual growth in employment, while the unemployment rate declines to about four percent.
“As the unemployment rates in other areas of the state come closer to long-term average levels, Kokomo is also expected to be closer to the state’s average,” Chulkov said.
That’s good news for Kokomo, but also creates a challenge in finding housing both for workers who move to the area for new jobs, and StarPlus employees coming from South Korea. Many of the South Korean employees will come for a year or two without their families. They will want smaller apartments and possibly public transportation that will need to be expanded beyond what the city currently offers, Moore said.
He said city and county leaders are working with the North Central Indiana Regional Planning Council to apply for READI 2.0 – the state’s community development grants.
Panelists noted that the U.S. economy outperformed what they expected at the end of last year. Consumption — a measure of Americans’ spending —grew at a 2.4 percent rate during the past year. In their 2024 forecast, the professors expect that growth to moderate through the first half of the year, with growth falling to 1.3 percent. Spending may be impacted by the return of student loan payments and loss of childcare assistance offered through the CARES act.
The forecast predicts that inflation will fall from an average of 3.9 percent over the past year to just 2.2 percent in the second half of 2024.
Other highlights included:
Employment growth in the U.S. will slow, and modest job losses could occur. Unemployment will rise from the 50-year low of 3.4 percent in 2023, but only modestly.
The international situation — the wars in Ukraine and the Middle East — presents risks to the U.S. greater than at any time in at least 60 years.
Indiana’s employment and income trend lines will mirror the U.S., but at lower rates of growth.
The model currently indicates little possibility of a recession in the near future.
The S&P 500 and Nasdaq-100 are both higher in 2023, which may limit upside even in a growing economic environment.
Global output is expected to grow at 2.9 percent in 2024.
Globally, there are significant downside risks to the outlook due to the increased risk of a broader war in the Middle East and how this could unsettle commodity markets, as well as the possibility for monetary policy to remain tighter for longer to curb inflation.
Platinum sponsors of the event were Smith Financial and Community First Bank. Gold sponsor was Kokomo Grain Company, and Silver sponsors were Rozzi’s Catering and Bucheri McCarty & Metz LLP.