Inflation still a factor but hope on horizon for Indiana's economy

Jan. 12—SOUTHERN INDIANA — It's no secret that prices have risen across Indiana.

Royal Couture Treats owner Minniequa Johnson feels the effects every time she buys eggs for her bakery, which is often.

"Inflation is going to affect our business until the economy can pretty much meet the demand. Even just now, with all the egg jokes on Facebook, it isn't a joke because we are trying to deal with it," Johnson said. "I use an average of six eggs per batch. I'm even looking at possibly trying to raise some of my prices possibly to cover the price of eggs."

Johnson is getting ready for the grand re-opening of her bakery in New Albany.

"I am noticing how our consumers are spending," Johnson said. "They're becoming a lot more cautious. As of right now we are all living day by day. The last thing we need is to go splurge on a cupcake or two and a tire goes out."

Last year wasn't the easiest for Hoosiers when it came to the economy, but financial experts are encouraged by the outlook for 2023.

Johnson is too. She said there are some positives she's noticed about the current economic situation.

"Wages have gone up, people are seeing this is kind of equaling out," Johnson said. "(They think) they got a raise and now they can indulge in simple pleasures like a gourmet cupcake. There are positives."

She's being proactive to combat inflation and said she'll soon be offering appetizers for catering and her business will soon be certified to accept SNAP and EBT benefits.

Although signs of an upcoming economic recession are showing, Indiana University Southeast Sanders Chair in Business Uric Dufrene said it likely won't be as bad as it was in 2008.

"One of those positives, I think, is that if there is a recession...you're not going to see the significant layoffs we observed in the Great Recession," Dufrene said.

Dufrene said it's likely there could be an increase in the unemployment rate, however there won't be any major spikes in joblessness.

"I would venture to say the unemployment rate would not exceed 5 percent," he said.

There are still more job openings than workers, which Dufrene said means it's likely there won't be mass layoffs even if the economy goes into a recession.

"At a time where we might see slower growth, employers will be more reluctant to engage in widespread layoffs because of the issue in attracting talent," he said.

Employers who are looking to add people to the workforce need to consider more than just salary in 2023, Dufrene said.

"They have to look at attracting and retaining employees in a holistic sense," Dufrene said. "That does not always come down to the salary or hourly wage."

He said opportunities to advance in a company or providing better benefits will attract employees in addition to just wages.

"Employers need to think about pathways that would enable one to landing a starting job, professional or technical, and how they can advance through the organization," he said.

Staffing issues are something that the owners of New Albany's Leaven Bakery and Bistro are experiencing, too.

"We cannot find staff members. We have had a job ad out for a bread baker for three months and we have had a few people that we hired, and unfortunately, they've only lasted three or four days, we are a small business — we can only offer a certain amount per hour," said owner Kimberly Maxey. "We cannot compete with Amazon's (wages.)"

Lack of staff is also leading the bakery to turn down wholesale accounts or restaurants who would like to use its bread for meals.

"There's always something going on in New Albany or Louisville," she said. "They need bread, with certain restaurants closing, the demand is still there for desserts and bread and it's like people have disappeared."

One thing that's stayed steadfast for the bakery is customers who are happy to support, even if they have to raise prices. Maxey said she's grateful and appreciates everyone who stops in.

"So the inflation that we are seeing is mostly food cost, price of eggs, price of meat has almost quadrupled since we opened 20 months ago," she said. "We have had to raise the prices, we expected a lot of people to kind of push back. In return people have really just been like we understand and we are just happy that you're open."

Maxey said the menu is priced so that people can afford to enjoy the food, and despite the struggles from the economy, there are positive aspects to the situation.

"It definitely has hurt our bank account with the inflation, but it has really opened our eyes for how much the community has opened up to us," Maxey said.

Indiana Chamber of Commerce President and CEO Kevin Brinegar said the state is investing a large amount of money into its workforce.

He said businesses tell the Chamber they either can't find enough workers, or they can't find the workers with the skills they need to fill jobs.

Brinegar said people with with college degrees or those with high school diplomas are mostly active in Indiana's workforce.

However, about 60% of people in Indiana without a high school diploma aren't working.

"That's an opportunity of needed focus to get those folks the training and lift up their skills," Brinegar said. "Because if we do, then they're much more likely to be in the workforce, and help fill the jobs we have open in Indiana. We have twice as many job openings as job seekers."

Inflation is also playing a large role in struggles for business owners.

"The other thing in some areas and for some employers that has even eclipsed the workforce shortages is inflation," Brinegar said. "As we talk about the economic outlook for Indiana, much of it depends on what the inflation rates are."

For this year and next, businesses will have to wait for inflation to slow down.

"I can tell you, it's a big concern among businesses of all types, those that manufacture finished goods, they're having trouble and need to raise prices to cover inputs," Brinegar said. "As you go back along the supply chain, those folks are experiencing fuel or labor costs. They're wanting or are raising their prices on components that go into a car it's just creating pressure."

The Indiana Chamber of Commerce is available to help businesses dealing with these issues. Brinegar said the hope is the state can better prepare youth for the professional world before they get there.

If businesses can't find the employees and need to train from within, the Chamber can help.

"One of the really key resources we have available to any employee that is looking is a resource we just rolled out in August called the Talent Resource Navigation," Brinegar said. "And there are over 600 training programs, and you can search by geographic area."

Brinegar said people can use these trainings even if they aren't a Chamber member. Those who are interested can go to Indianachamber.com.

There is some hope on the horizon for the state's economy.

"The encouragement is in recent months the inflation data showed the inflation rates are coming down," Brinegar said. "Although they are still high by historic means, there's some light at the end of the tunnel sooner rather than later."