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

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.

The Unanticipated Effects of SB1Businesses, governments and households may all feel the effects.

The Stupidest of PoliciesThis whipsawing of tariff rates has unnerved financial markets, which on Wednesday, were toying with a liquidity crisis.

View archives

Top Tags

jobs and employment 261
economics 201
state and local government 188
education 186
economic development 171
indiana 171
budget and spending 145
taxes 144
law and public policy 142
workforce and human capital 139
Browse all tags
Reporter / Admin Login

October 17, 2003

Midwest Marches to a Different Drummer

There was once a time when you could put little symbols on a map of the United States that told you what kind of businesses and industries the different regions were known for. You'd see bank buildings in New York , oil wells in Texas , insurance company logos in Connecticut , and airplanes in Seattle .  And, of course, in Midwest states like Indiana you'd put smokestacks, for the factories that build everything from machine tools to automobiles.

The fact that regions tended to specialize in some kind of good, service, or trade produced more than a decorated map.  It also produced what economists refer to as regional business cycles.  Those occur when individual states and regions of the country move together, in separate directions, as the overall economy moves up and down.

In the energy-shocked days of the late 1970's, for instance, the same skyrocketing gas prices that sent car sales and the Midwest states' economies south produced quite the opposite result in oil patch states likeTexas and Louisiana .  And the defense cutbacks of the early 1990's produced a deep recession in southernCalifornia that was much longer than what the rest of the country experienced.

But a funny thing has happened to the economy in the new millennium.  Diversification in state economies everywhere has progressed to the point where they are all beginning to resemble each other. Regional business cycles are getting harder to find.  If you were to color the states on a national map according to their economic performance in the last twelve months, it would look like a piece of abstract art.  Winners and losers sit side by side in all parts of the country, with no general pattern visible.

There's a glaring exception to that pattern, however.  It is the Midwest . Indiana and its neighbors on all sides would all be shaded the same color on that map, and that color would be the one that indicates poorest performance.

From Wisconsin to Kentucky , west toIllinois and east to Ohio forms a block of states whose employment losses have been among the largest in the nation.  We're not the only ones to feel pain, of course.  But in New England, the southeast, and every other region of the country, states losing jobs are flanked by others who have held their own.  Only in the Midwest is the picture uniformly bad.

That rings familiar to many of us who have spent our lives here.  Our specialization in manufacturing in general, and motor vehicles in particular, has always produced close linkages between Midwest states' economic fortunes.  But why is our region following the older script, when the rest of the country is on a different page?

Looking at the 2001 recession more closely gives some insights, but produces more puzzles as well.  This recession and recovery has clearly not produced a cycle in manufacturing that resembles the first in, first out pattern so typical in the past.  Factory jobs were the first to be cut, beginning in mid-2000, and at presently stand to be among the very last to rebound, if at all.  That's a finger pointed straight at the livelihoods of Indiana and its neighbors.

But through it all, consumers never lost their taste for cars and trucks. Indeed, the recession year 2001 gave us the second best calendar year for light vehicle production in industry history.

But the harsh reality is that what's been good for General Motors hasn't been good enough for America lately, especially for Midwest states like ours.  Productivity gains and the erosion of market share to foreign-owned rivals have two-timed the tried and true recipe for sparking growth in the industrial heartland, and exposed a gap in economic diversification between ourselves and the rest of the country. 

Link to this commentary: https://commentaries.cberdata.org/349/midwest-marches-to-a-different-drummer

Tags: unemployment and the labor market, jobs and employment, recession


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