Richmond.The Richmond-Connersville-New Castle (RCNC RCNC Royal Corps of Naval Constructors (naval architects, mechanical, electrical engineers for UK Royal Navy)RCNC Royal Corps of Naval Constructors ) area economy is sputtering A popular method for adhering thin films onto a substrate. Sputtering is done by bombarding a target material with a charged gas (typically argon) which releases atoms in the target that coats the nearby substrate. It all takes place inside a magnetron vacuum chamber under low pressure. given its interdependence in·ter·de·pen·dent adj. Mutually dependent: "Today, the mission of one institution can be accomplished only by recognizing that it lives in an interdependent world with conflicts and overlapping interests" with the national economy. The sluggish recovery is spilling over into the local economy in terms of employment, income, and growth. The manufacturing sector continues to be affected in varying degrees by current economic conditions. Firms producing durable goods durable goods Goods, such as appliances and automobiles, that have a useful life over a number of periods. Firms that produce durable goods are often subject to wide fluctuations in sales and profits. Also called consumer durables. , such as wire, machine tools, heavy-duty truck parts, and other transportation-related equipment, have weak demands and below target sales. The machine tool industry has overcapacity o·ver·ca·pac·i·ty n. Too great a capacity for production of commodities or delivery of services in relation to actual need: the problem of overcapacity in many large industries. and a lack of capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. . Also, the new emission requirements for diesel truck engines translate into low new orders. Consequently, some firms have laid off employees, while others have maintained employment levels expecting to have a good year. The rebates and zero or low interest rate financing offered by DaimlerChrysler, Ford, and General Motors are helping the automobile industry automobile industry, the business of producing and selling self-powered vehicles, including passenger cars, trucks, farm equipment, and other commercial vehicles. . Sales of both 2002 and 2003 model vehicles are at a robust pace, which helps to cushion the severity of the economic slump. With lean inventories and a fairly optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op industry outlook, auto makers expect a turnaround. Most manufacturers, however, expect orders, production level, investment, and employment to either increase or stay the same during the first half of 2003. They foresee fore·see tr.v. fore·saw , fore·seen , fore·see·ing, fore·sees To see or know beforehand: foresaw the rapid increase in unemployment. little change in most indicators before the end of 2002. On a positive note, Grand Vehicle Works of Union City reported that its subsidiary, Workhorse work·horse n. 1. Something, such as a machine, that performs dependably under heavy or prolonged use: "the 50-year-old DC-3 ... Customs Chassis, plans to manufacture diesel chassis for recreational vehicles in the closed Dana plant in Hagerstown. The company plans to make an initial investment of at least $3 million, which will create 100 new jobs at an average wage rate of $10.50 to $13.00 an hour for nonsalaried workers and $51,000 a year for salaried workers. This investment will give a tremendous boost to Hagerstown and the surrounding communities. Employment growth in Wayne, Fayette, and Henry counties was slow in 2001 and 2002 (see Figure 1). In September 2002, the numbers of employed workers were 34,040 in Wayne, 9,310 in Fayette, and 22,520 in Henry, and the unemployment rates were 4.8 percent, 7.6 percent, and 5.1 percent, respectively. These unemployment rates were higher than the state rate of 4.6 percent but below the national rate of 5.4 percent, with the exception of Fayette County Fayette County is the name of eleven counties in the United States:
[FIGURE 1 OMITTED] It is important to note that of all the employment categories, manufacturing continues to have the most significant impact on the local economy because of its high average wage rates. Income declines in manufacturing affect total local income. On the bright side is the housing sector. There is strong growth as evidenced by new subdivisions and home improvements. There were 3,099 building permits in RCNC during the first nine months of 2002 with an estimated investment value of $119.2 million. In Richmond, there were 1,164 permits, of which 30 were residential and 8 were commercial, with an investment value of $8.3 million. The overall investment value is estimated at $18 million which is much lower than last year (see Table 2). The drop in mortgage rates from a peak of 8.7 percent in May 2000 is making home buying more affordable. At the end of October, local financial institutions had 15-year, 30-year, and 1-year adjustable mortgage rates averaging 5.48 percent, 6.16 percent, and 4.52 percent, respectively (see Table 3). Rates for fixed mortgages remain near historic lows, allowing home buyers and people refinancing Refinancing An extension and/or increase in amount of existing debt. their homes favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. mortgaging financing terms. There is increased activity for homes priced between $75,000 and $120,000. Also, some upscale movement is occurring between local and new residents for homes priced at $200,000 and above. An increase in home buying always lifts consumer spending Consumer demand or consumption is also known as personal consumption expenditure. It is the largest part of aggregate demand or effective demand at the macroeconomic level. for home-related goods and services In economics, economic output is divided into physical goods and intangible services. Consumption of goods and services is assumed to produce utility (unless the "good" is a "bad"). It is often used when referring to a Goods and Services Tax. . Home buyers seem to be forward looking by taking advantage of current mortgage rates. They expect mortgage rates to edge up when financial markets incorporate higher inflation. Inflation is currently subdued sub·due tr.v. sub·dued, sub·du·ing, sub·dues 1. To conquer and subjugate; vanquish. See Synonyms at defeat. 2. To quiet or bring under control by physical force or persuasion; make tractable. 3. . But low interest rates could be a symptom of deflation deflation: see inflation. deflation Contraction in the volume of available money or credit that results in a general decline in prices. A less extreme condition is known as disinflation. that could have far-reaching consequences for households awash Awash (ä`wäsh), river, E Ethiopia, rising near Addis Ababa and flowing c.500 mi (800 km) to a swampy lake near the Djibouti border. The Awash Valley is important agriculturally and has hydroelectric plants. in debt. A fall in the price level raises the real amount of debt and redistributes wealth between debtors and creditors. Like housing, the service sector is growing. RCNC's health care services, business services, and management services are not as adversely affected by current conditions as manufacturing. As the service sector expands, it will stimulate employment and income in the region with spillover spill·o·ver n. 1. The act or an instance of spilling over. 2. An amount or quantity spilled over. 3. A side effect arising from or as if from an unpredicted source: effects on food and entertainment outlets. Personal income in RCNC showed a slight increase of 5.5 percent in 2000. The per capita [Latin, By the heads or polls.] A term used in the Descent and Distribution of the estate of one who dies without a will. It means to share and share alike according to the number of individuals. personal incomes for Wayne, Fayette, and Henry counties were $24,839, $23,412, and $25,345, respectively. Per capita personal income remained below the state level of $26,933 and the national level of $29,469. The recession that began in March 2001 has reduced income growth. Nominal per capita income Noun 1. per capita income - the total national income divided by the number of people in the nation income - the financial gain (earned or unearned) accruing over a given period of time growth for the U.S. as a whole last year was less than half the pace set in 2000. Furthermore, in its annual survey of local firms, the Center for Economic Education found that 93 percent of the firms are adversely affected by current economic conditions, 59 percent have hired new employees in 2002, 33 percent plan to expand in 2003, 53 percent do e-commerce, and 40 percent rate the education level of their workforce as good. Only 58 percent of the firms are optimistic about 2003. This could change since the midterm mid·term n. 1. The middle of an academic term or a political term of office. 2. a. An examination given at the middle of a school or college term. b. midterms A series of such examinations. elections are over, but there are still financial and political uncertainties, especially if there is another Gulf war. Overall, the fundamentals are in place for RCNC to have an uptick Uptick A transaction occurring at price above its previous transaction. In order for an uptick to occur, a transaction price must be followed by an increased transaction price. in economic activity in 2003. Growth could be uneven due to swings in capital spending, consumer confidence, and other transitory TRANSITORY. That which lasts but a short time, as transitory facts that which may be laid in different places, as a transitory action. developments. This forecast depends on economic conditions at both the national and international levels.
Table 1
Labor Force Estimates,
September 2001 and September 2002
Area Labor Force Employment
2002 2001 2002 2001
Fayette 10,080 10,460 9,310 9,440
Henry 23,740 23,510 22,520 22,410
Wayne 35,770 36,420 34,040 34,600
Indiana 3,151,037 3,110,483 3,005,442 2,990,052
United States 142,745,000 141,576,000 135,063,000 134,868,000
Area Unemployment Rate
2002 2001 2002 2001
Fayette 770 1,020 7.6 9.7
Henry 1,220 1,100 5.1 4.7
Wayne 1,730 1,820 4.8 5.0
Indiana 145,595 120,431 4.6 3.9
United States 7,683,000 6,708,000 5.4 4.7
Table 2
Building Permits Issued in 2002
Area Total Permits Total Amount
Richmond 1,164 $18,014,036
January 51 $1,039,324
February 53 $2,317,827
March 60 $1,399,628
April 168 $1,950,147
May 168 $1,823,471
June 180 $4,631,799
July 161 $1,363,763
August 176 $2,073,571
September 147 $1,414,506
Fayette County 251 $21,687,428
New Castle 867 $14,833,389
Henry County 454 $43,209,667
Wayne County 363 $21,446,347
RCNC Total 3,099 $119,190,867
Table 3
RCNC Area Mortgage Rates in October 2002
Bank October 27, 2002
15-yr. 30-yr. 1-yr. ARM
Advantage Home Mortgage 5.375 6.125 4.75
Capitol Mortgage 5.50 6.00 N/A
Eaton National and Trust 5.50 6.00 4.25
Edward Jones 5.50 6.25 4.00
First Bank Richmond 5.625 6.125 5.5
First National Bank and Trust 5.75 6.50 4.50
Flagstar Bank 5.375 6.00 4.875
Galaxy Mortgage 5.375 6.125 5.50
Kenrick Financial N/A N/A N/A
Main Source Bank 5.50 6.25 4.50
Merrill Lynch 5.829 6.405 N/A
Old National Bank 5.375 6.125 4.00
Premier Mortgage N/A N/A N/A
Union County National Bank 5.38 6.00 4.625
US Bank Home Mortgage 5.50 6.25 4.00
Wayne Bank & Trust 5.50 6.125 3.75
Bank October 20, 2002
15-yr. 30-yr. 1-yr. ARM
Advantage Home Mortgage 5.625 6.25 5.25
Capitol Mortgage 5.875 6.25 N/A
Eaton National and Trust 5.875 6.375 4.50
Edward Jones 5.875 6.50 4.375
First Bank Richmond N/A N/A N/A
First National Bank and Trust 5.75 6.50 4.50
Flagstar Bank 5.75 6.25 4.875
Galaxy Mortgage 5.75 6.375 5.50
Kenrick Financial 5.75 6.25 4.50
Main Source Bank 5.875 6.625 4.50
Merrill Lynch 6.229 6.53 N/A
Old National Bank 5.875 6.50 4.00
Premier Mortgage 5.75 6.375 5.00
Union County National Bank 5.875 6.375 4.625
US Bank Home Mortgage 5.875 6.375 4.00
Wayne Bank & Trust 5.625 6.375 3.75
Ashton I. Veramallay
Professor of Economics,
Director, Center for Economic
Education, Indiana University
East, Richmond
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