Nov. 16—ANDERSON — The business outlook for 2023 is like a roll of the dice with known variables the key to whether there is a recession.

Consumer spending will play a big role in the nation's economy, according to a panel of experts from Indiana University Kelley School of Business. They spoke during the annual Business Outlook at Tuesday's Rotary Club meeting.

Mark Frohlich said last year's prediction was that the U.S. economy would grow by 4%, but it ended up this year at 1.8%.

"In the past six months, interest rates (have) increased to deal with inflation and to slow the economy," he said. "The housing markets are down because of the higher mortgage rates."

Frohlich said the optimistic look for next year is economic growth of up to 1.5% but that unemployment will increase nationally to 4.5%.

"The pessimistic outlook is that there will be recession in the second and third quarters," he said. "Unemployment could be at 6.5%.

Frohlich said one of the variables is consumer spending, which was 15% higher than in 2019.

"Consumers drive the economy," he said. "If people stop spending, we're heading toward the pessimistic outlook."

Frohlich said 3 million people have left the workforce this year.

"There is no sign of them returning to the workforce," he said. "Companies are laying off people, but they are raising wages to retain the workers they have."

Carol Rogers said Indiana's economy could see a decline of up to 2% in 2023.

She said the state could lose from 50,000 to 100,000 people from the workforce, and the slowing economic growth will prevent companies from hiring new employees.

Rogers said that in Indiana, from 40,000 to 50,000 people have left the workforce this year.

"There is a lack of day care," she said. "The hope is the state will address the problem."

Rogers said transportation is another concern because people can't afford to purchase a car or make necessary repairs.

"Indiana is historically the first into a recession because of our manufacturing base, but normally the first out," she said.

Rogers said the IU business team is looking at places like Madison, Howard and Lake counties in terms of job loss and job growth.

"The unemployment rate in Madison County is 2.4%," she said. "The job market is so tight.

"Another concern is that some Indiana counties are facing a population loss," Rogers said. "You have to look for ways to attract people to Anderson because of the quality of life."

She said one advantage that Indiana has over other states is the water supply. Rogers said several Western states are facing a water shortage.

Phil Powell said the economy is in retreat because of inflation.

"We think the inflation rate has crested," he said. "A soft landing of the economy will be a growth rate of 1.5% and hard landing will be a decline of 2%.

"Households will determine a soft or hard landing," he said. "Watch holiday spending. If retail sales exceed expectations, that is good news for 2023. If retail revenues are down, that will be a bad sign."

Powell said people with investments in the stock market should not panic and should be looking to make investments in the future.

"Businesses looking to make investments should hold off for six months and wait for interest rates to decline."

Follow Ken de la Bastide on Twitter @KendelaBastide, or call 765-640-4863.