Hoosiers have begun the holiday shopping season with Black Friday coming and being Cyber Monday come and gone.

Over the next few weeks, Hoosiers are expected to spend millions of dollars combined on Christmas gifts, while also still feeling the effects of inflation which most economists agree is heading in the right direction.

Indiana University economist Phil Powell says falling inflation and increased consumer spending of late bodes well for the Indiana economy.

“If my business depends a lot on Christmas and the holidays, there are lots of reasons to be optimistic,” Powell told Inside Indiana Business. “There is no slowdown in consumer spending. Consumers are coming in very strong and inflation is down around two percent right now.”

With Indiana being a heavy manufacturing state, stronger consumer spending means an indication of higher demand for products. He said this will likely lead to higher wages in the near future and lay a good groundwork for when Mike Braun takes over as governor.

“For the first time in a long time our productivity, which leads to higher wages, is growing faster than the rest of the nation,” Powell said.

But, he said there is still some pessimism among consumers who are still getting used to higher prices due to inflation. Powell said the emotion behind that concern is valid, but adds that from looking at the raw numbers, inflation is not as bad as now as what some consumers may still be feeling.

Powell said looking ahead an area of concern with the economy going forward is President-elect Trump’s plans to enact tariffs on Mexican, Canadian, and Chinese imports. Powell said higher tariffs typically lead to inflation.