PNC economists think local recovery will take hold

There’s no mention of the European debt crisis in a recent economic forecast from PNC Bank, but Indiana’s second-largest bank is concerned about the health of Eli Lilly and Co.

“Of particular note on expectations are the long-run negative effects of Eli Lilly losing important patents in 2011,” PNC said in its second-quarter forecast for the Indianapolis area. “A strong and expanding Indianapolis economy will require stability from Eli Lilly in the years ahead. Depending upon new health care industry developments and the company’s ability to meet those challenges, Indianapolis’ growth faces some downside risk.”

Overall, Pittsburgh-based PNC likes Indy’s chances for a recovery this year. “This second attempt at gaining post-recession traction has a greater chance of success now that manufacturers are no longer shedding jobs,” economic forecasters said.

Another noteworthy point, especially for bankers, is pessimism among small-business owners. In the bank’s spring survey of Indiana small and midsize businesses, just 17 percent were “optimistic” about their prospects in the next six months.

Forecasters speculate that’s based on business owners’ view of the national economy—49 percent in Indiana were optimistic about the U.S. outlook, compared with a national average of 58 percent who were optimistic. “Until the U.S. economy is hitting on all cylinders, Indianapolis’ small businesses may remain conservative in their business expansion plans.”