Indiana Business Outlook Panel: Bloomington

Outlook 2021: Bloomington

The year 2020 has been unprecedented, and there are many unknowns heading into 2021. This virtual event is your chance to hear the perspectives of several of the state's leading economic thinkers as we all wonder what is in store for 2021.

12 pm on Tuesday, November 10

Faculty members from the IU Kelley School of Business and local panelists will offer forecasts and perspectives on the global, national, state and local economies, as well as the financial markets.

New this year is the addition of a local “C-suite” member of the business community to offer perspectives and responses to the forecast.

There will also be a Q&A session to answer attendee questions.

This virtual event is sponsored by the Bloomington Rotary Club and Greater Bloomington Chamber of Commerce

Description of the video:

Welcome to the Annual Bloomington rotary greater Bloomington Chamber of Commerce and IU Kelly School of Business Business Outlook panel. We will observe 15 seconds of respectful silence In order to personally reflect. Thank you. I'm the current Bloomington Rotary Club President, Ashley Wesley. I'm delighted to welcome you all today to this highly anticipated gathering which exemplifies the pursuit of peace and connection that rotary strives to achieve in its params and actions in our communities and beyond. For those of you unfamiliar with rotary, I offer a very brief introduction. Rotary started with the vision of one man, Paul Harris, an attorney with colleagues across a variety of professions. Paul Harris form the Rotary Club of Chicago in 1905. So the professionals with diverse backgrounds can exchange ideas and for meaningful lifelong friendships. It started with a small group before rotating lunch meetings to each other's offices and ruins the international organization focused on humanitarian service. It is today with over 1 million members globally. Much like our commitments to explore local and national challenges we face through this partnership today. Robberies Original Intent to gather professionals with varied interests to broaden perspectives and connections indoors. Thank you for joining us in a dialogue that bridges differences, builds goodwill and better friendships, pursues truth and fairness, and seeks the benefit of all concerned. It's my pleasure to introduce rotation. Bloomington city council member and friend Jim Sims, to offer our reflection. Good afternoon. It is my pleasure and honor to provide today Israel Terry and reflection as part of today's business and economic outlook for 2021. And I welcome today's esteemed panelists. The impacts of our economy are broad and far ranging. Now with that in mind, I think about one, what can we expect as we continue to work through the economic fallout exacerbated by the coronavirus pandemic. I also think about what affects can we expect specifically on those already struggling to make ends meet even prior to the pandemic. Many of you know, I was the United Way capital campaign chair for 20192020. I was much more educated and more deeply on the economic struggles of many in our community and in our region. The bottom line, as I see it, is how can we be more equitable, more inclusive of everyone, particularly of those in the lower socioeconomic sectors, those who are seeking and those deserving of social equity, racial equity, and gender equity. Within the context of our economy and its expectations in 2021 and beyond. Now I'd like to end with a quote from 990s six from a gentleman that was an early leader in the civil rights movement. He was a US representative from Georgia, who was a US Ambassador to the United Nations. And he was a 55th mayor of Atlanta. That gentleman's name is Andrew Young and is quote is as follows. We must go beyond addressing the symptoms of poverty to treating the causes of poverty. Tore that in that challenge is to evolve any economy that includes everybody. And it chords a fair chance to every American. If the country's monumental problems are to be solved to everyone's betterment. The disenfranchised must be given a realistic opportunity to apply themselves to economic achievement. It is my pleasure again to have given today's reflection and I am proud to be a friend and a member of the Bloomington ROCC Tarjan's, where we just look to serve others as best we can. Thank you. Thank you, John. That was a wonderful reflection and a great way to get started today. I thank you all for joining us today. And probably why the President and CEO of the greater Bloomington Chamber of Commerce. And we are proud to partner with the Bloomington rotary to host the 2020 business outlook virtual update. This FET event has been held annually for many years and always provides excellent insight and information for all of us. We could clearly pivoted to a new format. And I'm interested to see how much our panelists forecasting will include similar pandemic caused pivots. We're glad to have our panelists here today and look forward to a great conversation. I'm sure they'll have a variety of comments about how things have changed in the past year in addition to their 2021 forecast. We'd like to take a minute before we get started though and acknowledge those sponsors who have helped make today's event possible. Hello, wealth management, Indiana University, IU Health Bloomington, Hoosier energy, bugger and robertson, comprehensive financial consultants, the people state bank, pro blue, FC, Tucker, Bloomington realtors, Bloomington Economic Development Corporation. B KD CPAs and advisors, German-American bank, Ivy Tech Community College, malloc, Grosvenor, and Roger's group incorporated. Usually if we were in-person, we'd all stop for a moment and give them a round of applause to just in your souls, Take a moment and say thank you for these great supporters that allow these types of events to come to us. Even now in our new format. We really do appreciate their support. We also want to thank the Kelly School of Business for their support of today's business outlook luncheon. Before I introduce our moderator, I'd like to invite you to join the chamber in our efforts to help our community recover from the economic impact of the pandemic Your locally as a local information source, our website of the chamber continues to host many resources for the entire community, especially information regarding business recovery efforts. Information is helpful, but we also need to visit our local businesses to help them weather the pandemic storm. Our chamber staff is currently working on putting together a GIF guide to help me with exactly that. Stay tuned for our 20-20 gift guide release later this month. And hopefully it will serve as some inspiration to you. And you're shopping for our community to make it through this economic downturn, we need people shopping in our local stores, eating out or ordering out from our great restaurants, buy memberships to local arts organizations and donating to non-profit, helping our neighbors and friends. As I'm sure we all suspect. And I'm anxious to see if we're all correct from our panelists. The next several months will continue to be important to local, state, national, and international recovery. At this time, I'd like to introduce our moderator, Bill Powell, bills the associate dean of academic programs and a Clinical Associate Professor, Business Economics and Public Policy at IU Kelly School of Business in Indianapolis. That we're going to please let them again if we read first, that would give them a round of applause to fill their glad to have you here today and I will turn it over to you. Thank you. Thank you, Erin. It's great to join everyone today to think about what the future holds. Greetings from the Kelly School, Dean's office didn't cast her since her greetings. You know, if you were to summarize the mission of the Kelly School is to positively transform the knowledge, the people, the organizations, and the communities that we touch. And nothing is more central to this mission than graduating talent, helping business to drive prosperity in the greater Bloomington region. We have a global presence. But as good Hoosiers, we never forget our our neighbors, our neighbors in Monroe County and Beyond. Today we're here to help you think about what 2021 holds in store for us, both from a business perspective and from the larger economy. And especially during this time of a once in a century pandemic. I've been part of business salad panel for now almost 25 years. And I can ever remember a time when our forecasts were so critical and so important for our friends of the Kelly School and our friends of the Bloomington region. So I want to quickly introduce our panel in order because we're going to, we're going to talk kind of go down the line in terms of our folk, of our geographic focus. And then also during our discussion as you, as you listen to are my colleagues, to our presenters a giving their forecasts, given their perspective in the future. If a question pops into your brain that you want to ask, just go down to the bottom of your screen. You can type in the on the Q and a panel. And I'm going to track those. And if we have any time at the end, I'll, I'll I'll moderates some of those questions, but we invite you to ask any questions that you may have along and just type that in in the Q and a panel down at the bottom, your zoom screen. So we're going to start off with, with my colleague, Professor Andrew butters. He's a colleague and Business Economics and Public Policy. And Andrew, has it accomplished background in macroeconomics? He served at the Federal Reserve Bank of Chicago. Of course, we know a lot's going on at the Fed right these days. And Andrew is going to bring us both the national and the global perspective. And Andrew comes to the Kelly School was Ph.D. From the Kellogg School of Management at Northwestern. After Andrew gives us the national and global economic outlook, will then talk about our retirement portfolios, those financial markets with my colleague Professor Srini comma. Srini I've worked a long time Administration. Currently, Srini is chair of our Master of Science program in finance, which is growing leaps and bounds due to shrinkage leadership trees, also former Chair of our finance department, again, an accomplice teacher and accomplished administrator at the Kelly School. He and I go back a long way. Srini has his PhD in finance from State University of New York at Buffalo, suny Buffalo. Following Srini, we'll be back to business economics with my colleague Professor Carl Anderson. Kyle is currently our evening MBA faculty chair are part time MBA program in Indianapolis, right? Number nine in the country. And Kyle is homegrown. He had career in health care and then he got his PhD at the Kelly School of Business and Business Economics. Cow's going to give us the state outlook. From cow will go to to, to Jennifer Perl. I know Jennifer when she was at the indie chamber, but now she is President of the Bloomington Economic Development Corporation. Jennifer's going to bring our various her perspective on what 2021 holds for for greater Bloomington. Before her current dandy chamber, Jennifer had an accomplished career in Asia and was based in Beijing. So very broad perspective. And she, she comes to us with a Master's of Public Affairs and a Master's of East Asian Studies at Syracuse University. And then last but not least on the panel here, we'll hear from the C-suite from Andy, who is a chief operating officer at the IU Credit Union. Andy is a proud Kelly alum. We're proud to call him one of our own. And in fact, he serves on the board of directors for the Kelly School of Business Alumni Association. So anyway, we have a very accomplished panel. We're very excited to share with you our perspective on 2021. And we're gonna start with the US, a global outlook with Andrew. Thanks Andrew. Thank you. Thank you for the warm welcome. Set it cited to be a member of the Business Outlook this year and I look forward to an engaging panel discussion. So before I start, given my secondary affiliation with the fingers are being Chicago, I need to provide an initial disclaimer that the views expressed here today are my own and do not reflect the views of the Federal Reserve Bank of Chicago or the Federal Reserve system. So as charged with the US an international outlook, I would be remiss not to start off by acknowledging the unprecedented forecasting environment economists, businesses and policymakers have faced over the last eight months and will continue to face over the near term. Since March of this year, we've seen unprecedented drops and then increases in an economic activity indicators ranging from industrial production, payroll employment to real personal consumption expenditures. These abrupt movements and economic activity reflect the responses of businesses and households to the pandemic. Responses to the pandemic from fiscal and monetary policy, including the cares act and Main Street lending program were themselves unprecedented in many ways. And these were combined with a set of public health orders, the likes of which we haven't seen. This is all to say that the outlook provided today comes with a heavy dose of uncertainty attached to it. A theme I'll hit on more than once. I'm sure the International Monetary Fund is estimating that by the end of 2020, the global economy will have shrunk by 4.4% At the Indiana Business Research Center or Ib RC, we're cautiously optimistic that our estimate of 5% global recovery in 2021 will be just enough to erase the 20-20 Global drop in output. Turning to the outlook for the United States for April to June, the year over year decline in US GDP was 9%. Decline from Q1 to Q2 came in an annual rate of 31% was an annualized terms. To put that in historical perspective, the largest contraction of the great recession came in the second quarter of 2009. The year over year decline in that recession was 3.9%. The drop from Q1 to Q2 then was at an annual rate of 8.4%. The unprecedented decline in Q2 this year was met with a rebound enqueue. Three, advanced estimates have the annualized growth rate from Q2, Q3, thirty-three percent. Despite the rebound from q2, q3, the level of GDP in Q3 still constitutes a year over year decline of 2.9%. And in fact, we have still not return to pre-coded 19 levels of GDP projections from the ITRC. Other professional forecasters, including the blue chip consensus forecast that released earlier this morning, as well as another forecasting model that I had been a part of constructing referred here on this slide is Alex. All indicate that production levels, returning to pre-coded levels are unlikely to happen until later in 2021. That said, the dispersion of projections both within and across these forecasting approaches is wide enough to suggest that returning to pre-coded levels has an uncertain time table. Turning to the international outlook, next line. At the Ib RC. At the Ib RC, we are hopeful that with the sustained fiscal and monetary stimulus, the Eurozone economy will rebound and the economic activity will increase by 5% in 2021. With that said, the Euro area is divided into two zones, the North and the South. North Germany and the Netherlands have leveraged larger budget surpluses in a robust industrial structure to relatively speaking, mitigate some of the effects of the panda. Alternatively, in the South, Spain, Portugal, Italy, and France, the effects of the pandemic had been more severe in terms of economic outcomes, this reflects the combination of an initial fiscal situation that was more constrained and that the southern economies do rely more heavily on tourism. In China, we forecast GDP to expand by 2% in 2020. Things partly to China's manufacturing industries. Industries shipping production to address the global demand for medical products and other work from home equipment. We project the China's GDP will grow at a rate of 8% in 2021. The growth forecasts for emerging markets, however, remains fragile. Many of these countries economies are exposed to several potential downside risks, including the continued progression of the pandemic reliance on exports, including oil in a less clear future trajectory of fiscal and monetary policies in total. Next slide, the world's economies, as well as the United States, are most likely in front overall decline in economic activity at year end for those countries and regions of the US that are relying on service provided activities like vizier, hospitality, and business travel. The most recent data in near term outlook is gloomy. That said absolute. Another significant shocked that contributes to economic headwinds. Many businesses, regions and countries should expect rebounds and economic. Activity through the next year. So now I'll pass along to Srini, who will speak about financial markets. I think recent events pretty much seared in everybody's mind. So I dispense in the interests of time with the recap. Next slide, please. So we believe the market recovery since March has nothing to do with the health of the corporate sector as much as to policy intervention. And we expect this influence to continue into 2021. The Fed has provided as much liquidity as was needed, thereby averting a money market fund crisis such as that experience in 2078. In addition to slashing the Fed funds target rate to near 0, on March 23, the Fed announced an expansion in both the magnitude and the type of assets purchased into an tabled bonds, MBS as abs as corporate and municipal bonds. And it created mechanisms for lending to businesses. This extraordinary stimulus impacted both stock and bond markets. As a result of the tremendous balance sheet expansion, interest rates remain and will remain exceptionally low. Notwithstanding the spike that we had yesterday following positive news of what Pfizer's vaccine. This creates a high level of interest rate risk with yield so low, even a small increase will lead to substantial losses in the bond market. The low rates will also make it difficult for pension fund, specially defined benefit funds to state about water. Public pension funds will be severely stressed. The 73 largest state sponsored pension funds reduce the assumed return froms 8% before the financial crisis in 2007 to 7.3% in 2017. This reduction nowhere near matches the declining yields. The Fed action has also contributed to the rise in stock prices by lowering caplet costs and delaying credit risks. Artificially low cost of capital creates the risk of substantial overvaluation with the resulting misallocation of resources and dampening of economic growth. Furthermore, the stock market recovery we've seen as not all that it seems and actually hides important details. Most of the rebound has been concentrated in the five tech giants which accountable 1 fifth of the S and P 500 by market cap. Another significant contributor has been the health sector is only down about 1% for the year and accounts for as much as 15% of index. Next slide, please. What is the outlook for 2021? We believe Fed policy will continue to play the primary role in financial markets. In 21, the Fed, a signal does likely to keep interest rates low through 20, 23. Inflation risks remain low, which will keep capital costs low. But growth prospects, I fear will continue to be weak. If you'll look at dividend futures to gain some insights about what the future holds. The prospects are not as encouraging and the new. Dividend futures contracts that only pay the dividends on the market in a particular year. And there have historically been good forecasters of future economic growth. Finance scholars have used dividend futures to impute expectations of dividend growth rates. The finding is that dividend growth expectations over the next year and down by 28% for the S and P, 525% for the Euro stocks 50. As of July, the estimate of GDP growth from Dividend futures of the next year is down by 2% for the US and 3% for Europe. If you want a more robust forecasts that doesn't depend on a forecasting model. We can use arbitrage methods to derive a lower bound on expected dividend growth. And using this method, dividend growth rates have been revised down by as much as 43% in the US and 50% in the EU. Since the levels in January. Chief Financial Officers are also not saying wine. According to a survey by the Richmond Fed, CFOs continue expect continued slow growth during the next four quarters, averaging about 2.2% GDP growth. Consistent with my colleague earlier said, more than 60% of respondents reported that revenue projections have not recovered to the peak of its mark, and about 40% report lower employment. Moreover, only about one quarter of the firms that are below pre covered levels and dissipate a full revenue or employment recovery by June 21. The average firm anticipates months, if not years, until a full recovery. Cfos also indicate the firms will continue to limit spending and investment. Looking forward, fewer than a third of the firms report plans to increase spending on structures over the next six months. What are the risks? Next slide, please. Valuations remain high relative to historical averages. The forward PE is around 22, whereas the historical average is closer to 17. The cyclically adjusted KCL also remains near record highs. If P rewards to average, either earnings must rise of prices must fall. Fed purchases may be suppressing corrected risks that have not gone away. Also, longer-term bonds are most sensitive to interest rate changes and so face greater interest rate risk if yields continue to rise, fallen yesterday, spike on the heels of Pfizer's wax, milk on vaccine news. Why we don't believe these risks are high for 21, the risks could become very relevant. Later on. At a 135% of GDP, the US faces a greater overall federal debt burden and the costs of servicing that debt. But while we don't anticipate such a debt load will cause interest rates to rise in 21. It implies a greater amount which must be absorbed by some of the fed as well as private investors. Putting this together for a view of 21, we expect the positives are likely to outweigh the negatives for the market. But don't expect stellar or even normal returns and be ready to weather volatility. We expect valuations will continue to favorite companies which use technology and innovation to adapt to the new business and warm. We expect a low interest rate environment will continue to lead to lower fixed income returns in 21. And that interest rate risks will begin to climb as economic recovery continues. So what is one to do? Big shift we've seen has been that bonds no longer offer as much diversification from equities. And the traditional 60-40 makes that investment advisors typically use may need to be tinkered with going forward. Though the 60-40 makes us provided a compound annual return of 10.2% since 19, 87% this year. The prognosis may not be as attractive. Valuations imply returns of about 5% are nice and p going forward. And as stated earlier, lower bond yields are likely to continue. But with the added sting of very high interest rate risk, it may be wiser to reduce reliance on US bonds and large-cap stocks and seek a more diversified portfolio with more asset classes. Given these observations, that may makes more sense to invest in longer-lived projects such as infrastructure and private equity and earn if one can afford it the illiquidity risk premiums of these asset classes. Residential real estate is also looking more attractive. Returns over a 150 years have now matched equities. A repositioning towards real estate infrastructure, tips and private equity may reduce volatility. Thank you. And now on to cause my business economics. Okay, thanks Srini. So you've heard about kinda the national outlook and the financial markets. So I'm going to focus in on Indiana. And kinda the first thing that I didn't know, obviously Indiana is going to reflect a lot of what's going on in the US National Outlook. One thing to think about is India has actually a pro cyclical economy. And what that means is, you know, when things are good, Indiana tends to be a little bit better than average. And when things turn down, then things in India tend to be a little bit worse. That's largely because of our disproportionate weight on manufacturing. So if you've seen this chart and now it's probably a little bit small on your screen. But India has outpaced the US during the expansion in terms of employment growth. But when things turn down, Indiana actually took a bigger hit, but I've kind of split the year into two parts. The the shut down for the first half of the year and the recovery since then. And you can see that Indiana was kind of a leader and being harder hit. And is a leader in the recovery, largely us because manufacturing which can't be done in a work from home environment. And while the kind of goods and services, if you break down the economy between those two areas, India has more heavily dependent upon goods and less on services than the economy as a whole. This will tend to reverse going into 2021. What we're actually seeing is the goods economy is holding up better than the services economy. Unemployment right now in Indiana that 6.2%, which is actually better than the US and a lot of our neighboring states. So we're actually pretty well right now. But there's a big caveat with that. And that is we have 60 thousand people missing. And what I mean by missing is that is the reduction in the labor force since the beginning of the year. And so to have a full economic recovery, we'd need a recovery that will draw people back into the economy. And we'll see what happens. A lot of those folks at the labor force, that the missing from the labor force is disproportionately women. And that indicates to us that a lot of people are out, not just because of economic reasons, but because of family reasons. Folks who are leaving the workforce, hopefully temporarily, maybe to take take care of kids or other family members. We saw a big drop off in the labor force in August and September. So that's definitely suggested it, it's school-related. It, if we can go to the next slide. If we want to think about the economic growth. Of course it's not just one story, right? And, and so I have a chart here looking at kind of 5-year period from 2014 to 2018. And then second five-year period from 2019 to what its forecast out to be, 22-23. And we see that the growth is not equal. The urban areas, especially Indianapolis and the, the Louisville rage. And I know that's not Indiana, but the New Albany, that, that Southeast chord or of the state. Those are some areas that have done pretty well so that the larger cities are doing well. Notably college towns are doing pretty well. And some of our smaller industrial, such as Anderson, Terre Haute, Muncie, some of these areas are weaker in terms of employment growth. We're looking at jobs growth. Construction, transportation, warehousing, and health care are the industries that are doing the best to end. And one good thing for Indiana, and this might explain why we're doing a little bit better is our reliance on transportation, warehousing, all those things you've ordered from Amazon. A lot of those are coming out of Indiana. And so that part of the economy, it has helped stabilize US. Growth in jobs in, in retail and education are areas where we're being kind of the hardest hit or weakest in terms of job growth. So let's go to our outlook, that next slide please. For the state forecast, you'll see output increases in job growth in 2021 and basically expect that to offset that damage of 2020. And that sounds like a good thing, but where we're forecasting to be is essentially a lost two years. That is December of 2021 is going to largely look by December of 2019. So, you know, yes, we'll have recovered, but will have recovered in a way that we missed out on two years of girl. I think there is a strong need for economic stimulus. So we're really paying attention for the health Minneapolis economy to what's going on in Washington DC. And the reason that matters for Indiana is to drive consumer incomes. Again, we need folks buying manufactured goods. The auto industry still plays a big role in Indiana. And the economic stimulus will drive some of that consumer spending. We need help for our small businesses that's everywhere. This, this winner's going to be really roughly, you know, we're all aware of especially, you know, restaurants, entertainment venues, those things that we think of going to have a very hard time. And I think I hope the government will take action to support those businesses. State and local government spending is going to also be a big driver of our recovery. Tax revenues are going to come in much lower in 2020 than they were in 2019. And I think that we don't want to see that play out in budgets that are slashed, that will being cut, jobs and a longer recovery period. I'm expecting that unemployment will fall between 4, 5%. So that's pretty good. It's, it's going to be higher there where it was in 2019, but still any unemployment number below 5%. A pretty healthy economy, improved trade. We talked a little bit about policy on the stimulus side. I think that one of the challenges for Indiana is that the international trade environment has not been very good over the last four years. And we're really hoping that a Biden administration will improve the the outlook for global trade. Indiana's a huge exporting state and that's going to make a big difference for Indiana. So I'm hoping that we'll see more favorable trade policy going forward. But it's not clear what that's going to be. The, the, the Biden campaign really didn't talk much about international trade. So we don't have much to read into that. And all of our forecast is obviously dependent upon the pandemic improving. We're really obviously for, for just population and health reasons, we all want to see that. But also it will help drive our economic recovery. Okay, so that's our state outlook. With that, I'm going to pass it over to Jen. And she's going to talk about the Bloomington outlook works always 74 degrees in November. And rethinking some rich. It's great to see everyone here. I represent the BDC, which is a non-profit corporation dedicated to retaining, developing, and attracting quality jobs in Monroe County. Next slide, please. We'd like to start by mentioning the link between public health economics and business which impacts our 2021 outlook. There's a public health concept called the social determinants of health, which illustrates this relationship. And as shown in this figure, economic stability, physical environments, education, food, community, social contexts, and the healthcare system all influence health outcomes of individuals and communities. These factors have also been stream by the pandemic. The success of our employers relates to having a healthy, vibrant workforce and a strong community that can participate in economic activity. All of the local him, employers that we interviewed for this presentation discuss the pandemic, economic stability, housing and workforce training in some way. Our ability to influence the business outlook for 2021 relates to how well we work as a community to address these challenges. Next slide. Here's a forecast for the Bloomington metro area provided by the Ib RC. It shows the Monroe and Owen counties, which are part of our MSA as defined by US Office of Management and Budget. When we close the books on 20-20, Bloomington will have had a 6% loss and jobs over 2019 levels. But this is going to be offset in 2021 by gains of about 5.5% in job growth. Conversely, the wages, income, and investment losses of 2020 will effect the first couple of quarters in the new year and results in an overall shrinkage of 3%. The bottom line is that jobs are forecast to bounce back and 2021 barring any major lock downs coming back by almost six. And this is mainly due to businesses getting back to full employment. However, personal income growth is not as likely in 2021 or for much of the year with considerable gains expected in 20222023. Next slide, the BDC interviewed 20 of its members and partners regarding their outlooks for 2021. These organizations represented a range of industries listed here with no large sample of respondents in any one industry. So these responses should be seen as examples of individual employer experiences across the community. Some notes that we got by industry. One was that hospitality and tourism businesses most heavily impacted by the pandemic and are forecast to recover more slowly than other industries. Medical and health services have been heavily impacted with Greek demands on the industry. However, a local health executive expressed an optimistic look, outlook for 2021 based on plans to hire additional staff. Lessons learned this year and plans for expansion. Life science industry executive indicated some uncertainty for 21. As hospitals across communities filled with COPD patients, some of often to limit elective medical procedures, which affects demand for some medical products. A manufacturing executive noted that the automotive industry is showing a stable for 2021 was sales in Indiana strong? Us vehicle production is projected though at lower than 20182019 levels. A couple of local construction and sub-contracting companies have noted that they will be affected by decisions on major construction and renovation projects that are tied to public and private funding. With more to be seen with what happens in 2021 are residential real estate remains very strong with prices continuing to rise, given a lack of local housing supply and local interest rates, low interest rates. And this is both a challenge for the community as well as an opportunity for those that are in real estate. Depending on where you stand. A couple of banking executives have expressed optimism or cautious optimism for 2021, noting that federal appointments and economic policy decisions will impact the banking industry. And finally, a couple of financial and retirement planning experts that were interviewed indicated strong continue demand for their services given the uncertainty brought by the sphere. On the right side, here you'll see there were a few common themes that came out of conversations with our local employers. One is the impact of IU plans through the pandemic. I use Plans impact the local economy in three major ways. One is student presence, both as a part of our local consumer base, but also part of our local workforce, especially for seasonal and part-time work. Second is events. Decisions on IU athletics and graduation will impact local businesses, especially in hospitality and tourism. I use not yet made an announcement regarding commencement or basketball season. And then the other area is are you building and renovation projects? These will continue to impact the business outlook. I use long-term, larger capital projects are dictated by funding from the Indiana General Assembly, which will convene beginning in January. Another major theme was that the pandemic and public health will continue to impact business in the new year. Almost all of our interviewees mentioned the pandemic. A few indicated the need to keep businesses open, while others simply noted that shutdowns would change their 21 outlook. Others noted the need to manage the pandemic to ensure consumers feel safe to come out and patronize businesses. Various respondents expressed hope that a covert 19 vaccine could help business return to business as usual. We also saw themes and ongoing challenges. One is workforce. Some industry respondents, especially those in production or those that require direct interactions with customers, are experiencing labor shortages. These challenges started before the pandemic and intensified in 20-20. Housing has mentioned is still a challenge for our community and a few employers have noted the need to create more workforce housing to support talent attraction and retention efforts, and an affordable quality of life. Simultaneously, some respondents indicated concern about empty retail spaces, which may be exacerbated through business closures. At the same time, developable land for housing and larger employers remains limited in our community. Remote work came up in a number of conversations. Those businesses that have been able to pivot from in-person service to remote and delivery options have fared better. Other respondents indicated that remote work will remain a challenge and 21 based on their industries in organizational cultures. And finally, a theme was that financial stimulus would continue to help. As mentioned earlier in the presentations, local businesses with smaller reserves, narrower cashflow margins are more vulnerable as Monroe County weathers the next few months. And even companies that have fared well over the last year have indicated that they're 2021 outlook is affected by other businesses. So overall there's both cautious, optimism and uncertainty. Next slide, please. Despite national headwinds that impact our community, we do have an ability to influence some of the outcomes of our actions. I'm originally from Cleveland and you can see this is a weather forecast actually grabbed from April. And something you learned growing up in an environment like that is that you can't control the weather, but you can control what you do within it. And when we ask what we can do is community, there are a number of recommendations that have come through conversations and the work we've been doing. One is minimizing the spread of Copan 19 by continuing to adopt public health practices like social distancing, unmasking the supports a healthy workforce. And consumers that feel safe are more likely to go out and patronize businesses. Next is to collaborate unshared economic development priorities and challenges. The pandemic sexually increased collaboration across our local institutions. And we can build on this momentum to define and focus on shared priorities and challenges. In 2021, there is no one organization or sector that can solve these broad challenges alone. And in addition, this needs to be connected to regional and state strategies. Our ability to prosper, and for all parts of our community to prosper is tied to the communities around us. So there is a need for collaboration across county lines. Also, we need to diversify employment opportunities. The pandemic has underscore to finding of earlier economic development studies that are community and opportunities for individuals will be stronger if we can diversify our employment base to include more future-focused industries like technology. However, this has to be connected conversations around workforce. We've seen that individuals that make less than $27 thousand a year were actually impacted in a more intense way by the pandemic. And there are also slower to recover inclusivity across or our community is a key aspect of this. And the more we can tie the needs of employers with the needs of the workforce and bridge some of those gaps, the better position we will be. And finally, support for small businesses. Small businesses form a major component of our local culture and economy. Our support for these companies in the coming few months will have an impact for years to come. At that. I will pass it over to Andy from the credit union. Yeah, good afternoon, everyone. I appreciate the opportunity to spend just a little bit time talk to you about how the pandemic has influenced and impacted art or organization. And talk briefly about what we see going forward. But clearly there's been a major disruption in the way that we deliver service to our membership. That I would be remiss if I didn't say how proud we are as an organization for our members and our Please. And how they've responded to the pandemic and been able to keep a level service that has just been extraordinary through these times. Clearly, we've had to pivot. There's been, you know, with our pandemic plan. It never goes according to plan. So we've had to spend a lot of time making adjustments on the fly. We've had an eternal, a team that meets weekly to review local and state and federal health guidance and we adhere to all those, you know, one of the things that we had to do early on was during the shutdown was figure out a way that we could continue to provide a level service, try members being a critical service. And so we closed our lobbies, we've open, really stressed our drive throughs as an alternative. Our ATMs and our digital platforms have really taken off. And so, you know, another thing that we really had to be conscious of two, was in order to protect the health and well-being of our staff, we decided to make some changes to wear. Our staff is located, so we've had to purposely split some of our departments and they are operate in different locations, which obviously makes it very challenging for for our departments. But nonetheless, we felt like we needed to build some redundancies into that. And also again, to protect our staff in case we did have infections that we needed isolate. And then, you know, as we started working towards this way, it became apparent that in addition to stimulus, we want it to be very proactive and providing relief measures for our members. So we looked at loan deferrals, skip a pay options, waving a variety of different fees, and really just doing whatever we could to help our members through this through this time. I think it was about the end of May is when we are lobbies began to reopen, but we have seen a really dramatic shift in the way that our members interact with us. Now we've seen, you know, clearly our industry was going towards a more digital experience from a transaction standpoint. But now it, it really has accelerated that and we see that long-term being positive for the industry, but something that we're going to have to adjust for. Because our lobbies will really become more service oriented problem solvers. And also a place to open accounts and take loans. You know, as I think as Jen mentioned earlier, from a remote work standpoint, our industry is not well-suited for that, for a variety of different reasons, primarily for data security and just the technology needed for that. Obviously financial services, it's just difficult industry to, from a technology standpoint to deliver those services remotely. But we have invested in some technologies and working with other credit unions it within our industry to help seek opportunities where that can be feasible. So we're, we're working towards that. But again, like I said, going forward, I think we're going to see this, this really dramatic shift in the way that members interact with the, with the iii Credit Union in terms of this digital platform. So we've been very intentional beef up our call center, a contact center. We've seen a dramatic increase in the number of calls that we've seen through there. And just really focusing then on how we can continue to deliver really high-quality service try members in this digital world. And so with that, I'm going to turn it back over to Phil to go in our Q and a. Thank you, Andy. Great stuff for painlessly kinda bring their cameras back on. Time is short and we want to respect her by times I think we have time for I've got two questions I'm gonna tee up here. And I think that the first question, what would first go to Andrew than I think to call the state level? I think the markets, the markets are, or get our beta_1 on, on January 20th, biden being our next president. So there's still some question marks. So we have a question about an Andrew at the, at the national level. How do you think this plays out differently for trade? What kind of changes are we going to see? Where the biggest impacts? And then Kyle and he follow-up comments with regards to impact here in the state of Indiana, where state of Indiana, everybody may not know is what are the top ten states in terms of its, of its state economy integrated with trait. So this is important for users. What about the national level on trait? If we joe biden comes into presidency on January 20th. Yeah, no, it's a great question. I think. I'll piggyback a little bit on actually a theme that Kyle, actually you already already mentioned and that is there's not a lot of certainty regarding what are going to be the trade policy stances of a, of a Biden administration going forward. Now it's certainly the case if you just look at the recent data over the last couple of years that there has been there's been a hit. There had been a hit in terms of both on the manufacturing side as well as on the agricultural side of employment and production as a consequence of some of the trade policies that were introduced by this, by the current administration, I guess. But, you know, taking that and reading how much that is going to change over the next three or four years, I think, is a little bit tough to say until some very definitive policies getting put in place. And so I just think there's a lot of uncertainty associated with that and until some work specific policies get wouldn't play. Yeah, I would agree with that very much. And I think one of the unfortunate consequences of our political environment right now is that both sides kind of find it advantageous to, you know, politically advantageous to bash free trade. And so much economic value is generated by our ability to import and export. And really, it is an activity that, that, that raises all boats and that doesn't mean it doesn't have some negative effects that we want to smart trade policy. You know, the when we had the, under the Obama administration, we were working on some trade deals that I think would have been actually the, the Pacific Trade agreement that would have been very effective in giving us some leverage over China and help us negotiate that well. And that has since been PUT asunder. And it's not politically popular. So I don't know whether a abided administration will be that aggressive. And it's one of those areas that free trade can be unpopular both on the left and on the right. And, and so it's, it's a very cloudy Outlook. And you know, when we think of Indiana, go manufacturing world sports, but, but I know Jen Bloomington, whether big export from Monroe County, that's education, services export were actually the US as a services trade surplus. People don't realize that. Can you, can you talk about how sort of what you're seeing at the global level impacts Bloomington locally. What course are major export being? Education? Absolutely said We are major export in services is education with several thousand international students coming in. And you've seen large groups of students just dry up this year that they're just not on campus that has a major impact on the economy. In addition to local manufacturing. And we should note that Catalan has been, is lined up to produce some of the vaccine candidates. So we are connected on many different levels to global trade. In addition, any influence of global trade on materials, such as materials that go into housing and other things like that. It has an impact on our economy locally, on that drives up the prices of housing. If international materials prices go up, which can exacerbate any challenges that we see locally. Thanks Gin. I've got what we got time for. One more question which I want to direct to Srini and Andy. And this has to with the Fed and the banking environment. So Srini, One of the questions we've got here is kind of the macro national level. You know, how can the Fed continue to stimulate the economy if interest rates are at 0? And with that anti-A, after training answers his question AND I'd love to get your perspective on what's it like to run a credit union or a financial institution under 0 interest rates? Treaty. I agree. That's going to be a challenge that will run into the limits of monetary policy. And the fed will just have to keep expanding the set of collect, the kinds of collateral that will accept. And as it does that, I think we're going to be running into moose severe problems. Another big issue along those lines is whether they have to rethink the guidelines that put into place after the prime fun crisis of prime product catastrophe, even when the prime fund broke the buck, the 2008 crisis. There was an attempt to institute a circuit breaker where it said prime funds have to keep at least 30% of their assets in liquid funds to be able to use meet redemptions. But now what's that diet? Is they sort of forced the created a, sort of a bank run on fine fronds when things got in trouble because nobody wanted to be stuck at the end of the queue when the liquid assets fell below the 30% cutoff and the fund could no longer redeem OK, or satisfy redemptions. So they'll think about that too. Well, thank Srini and also realize that the Fed has kind of opened up mainstreet lending, right? In that the Fed is directly lending to the private sector. Usually just has those trent, it's usually deploying cache just to the commercial bank transactions and open market operations. Part of a sort of pull the patron from quantitative easing. And what's at the CEO, at the CEO level read an a bank run an accredited Credit Union right now, what's, what's, what's, what does a 0 interest rate environment look like right now, forgotten. What are the challenges? And, and, and maybe to opportunities? Yeah, absolutely. There certainly are challenges from a balance sheet perspective because our investment, the primary driver of, of revenue, or, you know, is that net interest margins. So what we receive on our loan interest income versus what we pay in deposits. And so that inter spread, Obviously in this environment gets compressed quite a bit. So our members certainly benefit from it because we've seen just tremendous loan demand, particularly on the mortgage side, real estate's, I think Jim mentioned earlier about the real estate market is really quite, quite robust here in Bloomington. And so our members benefit from that, from either a purchase standpoint or from a finance standpoint. But from an overall balance sheet perspective, there aren't very many investment alternatives out there anymore. So what we're forced to do then is to see clearly in this environment too with the stimulus checks that have come in. With many of our members, not transacting, not spending as much. We've seen our balance sheet really booleans. So we have quite a bit of deposit, quite massive deposit growth over the last few months as simply because of behavior changes. And so trying to deploy that excess capital, excess cash into different investment alternatives has been a candidate challenge. And so we're going to continue to see that if we see these interest rates, which we do for c in the, in the long-term. And so it's going to be become even more and more of a challenge. But I think again back to it really does benefit are members from whether the purchasing cars or buying homes or refinancing. Thanks, Sandy. Well, if I look at the clock as it were, just a few minutes away from from finishing here, someone handed back over to Erin Erin Kelly School. Thanks you. And and and the Rotary Club for this opportunity. And we're, we're, we're the business school at the Number Ten football powerhouse in the nation. Who would have thought that when we did this last business outlook last year, right? 90 elegant mentioned that's been one of the most surprising things of the year, has been i Football and unexpected bright spot for us all as they all stand agog at there. Powerhouse cells than the theme powerhouse, go Hoosiers. Nietzsche. That's right. Well, thank you very much to all of our panelists and to you Phil, for moderating. This has been a great informative session for all of us today. I think we know that 2021 is still going to hold a lot of uncertainty. But it was I have to say to all of you, very reassuring to hear that there were a few positive forecast or some things that might not turn out badly. And it sounds like there's some, some areas for bright spots beyond IU football that we have to look forward to in the coming months. So with that, I'm going to hand it to Ashley Ashley Wesley who's with rotary to I guess to lead us with a four way test, I think as we wrap up our meeting for today. Thank you again to all of you on behalf of the Chamber for both presenting and then also attending. This has been a wonderful presentation. Ashley. Thank you, Erin. Let's recite the four-way test of the things we think, say, and do. First, is it the truth? Second, is it fair to all concerned? Third, will it build goodwill and better friendships? Fourth, will be beneficial to all concerned. And a little add on we like to do. Is it fun? Thank you.