Article published Oct 27, 2005
Speaker: Healthy construction industry helps Grant County
BY RACHEL KIPP

A nationally recognized economist told local business leaders Wednesday the recent national boom to the construction industry may decrease soon, leaving a potentially dangerous hole in already-shaky economic conditions.

“I know you don’t believe there’s a housing bubble, but there’s a huge bubble,” economist Edmond Seifried said, telling a story about his sister being offered double what she paid for a Florida condominium months after she bought it.

“We can’t afford for the housing bubble to burst,” he said. “It has to deflate.”

Seifried, an industry consultant and professor of economics and business at Lafayette College in Easton, Pa., was speaking as part of a daylong tour at STAR Financial Bank locations across the state as part of a series of economic forums.

Although Indiana and Grant County aren’t seeing the dramatically rising prices being experienced by parts of California and Florida, Seifried said the health of the national construction industry does have an effect here.

“A healthy construction economy nationwide will help even this county,” he said. “If the economy is healthy nationwide, there will be demand for products and services made here. I don’t think the construction trade here is dead. It would be helped if the mortgage rates stay low.”

The bank used to regularly have economic forums in Marion before moving the business’s headquarters from Grant County to Fort Wayne, bank President Jim Marcuccilli said. Last year, bank officials added Indianapolis as a second location for the forum and this year Marion was included as a third.

“This is our first economic forum in the area in recent years,” Marcuccilli told the group of business owners, local government officials, bank customers and employees who gathered at the Meshingomesia Country Club. “And I’m glad to be able to offer you this opportunity once again.”

Along with the national housing market, Seifried discussed energy prices, interest and mortgage rates and what effect those factors could have on the overall U.S. economy.

“In the last 15 years something very strange has happened in America,” Seifried said. “There’s been a real change in the way we do business … Cities like Marion, Muncie, Kokomo, Bethlehem, Pa., Pittsburgh, Columbus, Ohio, Midwestern cities, old industrial cities began to lose that industrial base to China, India and Asia.”

As Seifried talked, he asked forum attendees to examine charts of economic indicators including the U.S. trade deficit, the 30-year mortgage rate and the federal fund rate. Figures for each were included from 1991 to 2004 and Seifried read statistics for each month of 2005 to give participants an idea of which way the trends were heading.

After the speech, Jim Smith, superintendent of Oak Hill schools, said many of the topics discussed relate directly to what’s happening at the school corporation, particularly as officials deal with the rising cost of running school buses and prepare to begin a $10 million high school renovation project.

“Running a school corporation is like running a business,” he said. “We pay attention to all of the factors that he talked about.”