Center for Business and Economic Research - Ball State University


CBER Data Center
Projects and PublicationsEconomic IndicatorsWeekly CommentaryCommunity Asset InventoryManufacturing Scorecard

About

Commentaries are published weekly and distributed through the Indianapolis Business Journal and many other print and online publications. Disclaimer

RSS Feed

Disclaimer

The views expressed in these commentaries do not reflect those of Ball State University or the Center for Business and Economic Research.

Recent

It’s TDS to Suppose These Tariffs Are WorkingTrump has pushed the U.S. into an economic downturn that will be especially hurtful to Hoosiers.

Trump’s Tariff Recession Is HereMy new forecast, completed in late April, predicts a national recession began as early as March in reaction to Trump’s tarriffs.

Two Key Economic Lessons in One BillHoosiers face trade-offs and opportunity costs in the wake of SEA1.

Time to Fix Economic Development PolicyAllocating tax dollars to land development won’t cause economic growth.

View archives

Top Tags

jobs and employment 261
economics 202
state and local government 188
education 186
indiana 172
economic development 171
taxes 145
budget and spending 145
law and public policy 143
workforce and human capital 139
Browse all tags
Reporter / Admin Login

April 23, 2007

Another Take on Scoring the Indiana Economy

It was 1980 when then-candidate Ronald Reagan asked audiences whether or not they were better off than four years earlier.  It was smart politics – 1980 was a recession year – but, politics aside, it’s always a relevant question.  For if the economy is not growing the pie that we all share, then those who manage it, not to mention those in political leadership roles, have cause for concern.

But how do we answer such a question?  With the due date for tax filings just behind us, one way immediately comes to mind – are you or your household making more money?  When you add up what every one of us makes – not just in wages, but from all sources -- you get something called personal income, which is closely tracked by our friends at the U.S. Bureau of Economic Analysis for states and major cities. 

And even though it gets a lot less ink in the business media than the employment reports, personal income is the single most comprehensive measure of our economic performance at the state and regional level.  It goes up when more of us are working, of course, but it also tells us something about the quality and the intensity of those jobs.  And it also reflects the fact that about 34 cents of every dollar of income American households receive comes from something other than wages and salaries.

There is mixed news on income growth in Indiana.  Perhaps the most important thing to note is that if we use income to keep score on things, the state economy accelerated in 2006, registering an average 5.1 percent growth over the last calendar year.  That compares well with the 4.2 percent growth registered in 2005. 

Wage and salary income growth was also better in 2006, picking up to an average of 4.5 percent after managing just 2.9 percent growth in the previous year.  Much of that increase was due to increased earnings in durable good manufacturing industries in the first half of the year.  But 2006 was also a good year for so-called unearned income, with dividends, interest and rent growing at a healthy 7.7 percent for the year.

That’s the good news.  Taking the glow off of these upbeat findings are two sobering pieces of information.

The first is the fact that the rest of the country, by and large, fared considerably better than we did, especially outside the Midwest.  The fact that U.S. personal income growth, which averaged 6.3 percent in 2006, was more than a percentage point higher than Indiana says that the state is not fully participating in the current national economic expansion.

No surprise there, some would say.  Indiana’s slower growth has affected every economic indicator from population growth to per capita income.  Yet less well known is the fact that personal income growth statewide was actually marginally higher here than the national average in the first two years following the 2001 recession.

Now that we have reverted back to the longer-lived trend of slower state growth, there is a second concern raised in the BEA report.  While overall growth improved in 2006, almost all of that growth occurred in the first half of the year.  Since that time, income growth has cooled considerably, with manufacturing earnings actually declining since March of last year. 

While income growth in health care industries and most notably wholesale trade employers continued strong throughout the year, manufacturing earnings still dominate the state totals, not to mention the viability of countless Indiana communities.  Declining activity levels – if not outright shutdowns – of manufacturing facilities around the state are beginning to be reflected in our collective pocketbooks.

Link to this commentary: https://commentaries.cberdata.org/170/another-take-on-scoring-the-indiana-economy

Tags: taxes, economic development


About the Author

Pat Barkey none@example.com

Patrick Barkey is director of the University of Montana Bureau of Business and Economic Research. He served previously as Director of the Bureau of Business Research (now the Center for Business and Economic Research) at Ball State University, overseeing and participating in a wide variety of projects in labor market research and state and regional economic policy issues. Note: The views expressed here are solely those of the author, and do not represent those of funders, associations, any entity of Ball State University, or its governing body.

© Center for Business and Economic Research, Ball State University

About Ball State CBER Data Center

Ball State CBER Data Center is one-stop shop for economic data including demographics, education, health, and social capital. Our easy-to-use, visual web tools offer data collection and analysis for grant writers, economic developers, policy makers, and the general public.

Ball State CBER Data Center (cberdata.org) is a product of the Center for Business and Economic Research at Ball State University. CBER's mission is to conduct relevant and timely public policy research on a wide range of economic issues affecting the state and nation. Learn more.

Terms of Service

Center for Business and Economic Research

Ball State University • Whitinger Business Building, room 149
2000 W. University Ave.
Muncie, IN 47306-0360
Phone:
765-285-5926
Email:
cber@bsu.edu
Website:
www.bsu.edu/cber
Facebook:
www.facebook.com/BallStateCBER
Twitter:
www.twitter.com/BallStateCBER
Close