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May 9, 2003

Is Indiana's Economy Still Getting Worse?

One of the most memorable scenes in the classic movie "The Wizard of Oz" has Dorothy's little dog Toto pulling back the curtain in the corner of the Wizard's huge hall to reveal the mild-mannered person pulling the levers that make the fearsome image of the Wizard come alive.  "Pay no attention to the man behind the curtain," the booming vision commands, but the little dog has put to the lie the entire apparatus that gives the Wizard his power.

In the real-life story of the Indiana economy of 2003, the booming pronouncements are coming from our state legislature, in the form of a budget the essentially tells us that we can keep the state ship afloat by cutting a few corners.  But what is really at the controls in the situation is our state's economy, which doesn't appear to be on the same page.  Until and unless the state's economic indicators shape up and start moving in the right direction, those hopeful pronouncements will ring hollow in the months ahead.

After treading water during most of last winter, Indiana's seasonally adjusted job total has slipped since January.  The preliminary April employment totals, as adjusted for seasonal variation by the Bureau of Business Research, were down by 39,000 jobs statewide from theirhigh point at the beginning of this year.  At 2,862,000 workers in April, that puts state payrolls down by about 1 percent over the most recent twelve months, and down by an unofficial 153,000 jobs since the state's pre-recession high water mark of January 2000.  That loss, which represents about 5 percent of the state's workforce, was calculated from our own seasonally adjusted data.

Making an assessment or prediction from the preliminary data on state employment is a risky business.  Past experience has taught us all that revisions to these data, made as better source information comes available, can substantially change their depiction of our economic health.  But the direction and magnitude ofIndiana's most recent job are consistent with the lethargic performance of the national job market in recent months.

According to the employment data, some sectors of the state economy, as well as some individual cities, are feeling more pain than others. Construction payrolls were sharply lower throughout the state in April, compared to the same month one year earlier, falling by an average of 6.2 percent statewide.  The sole exception was the New Albany MSA, where new home building has continued to rise.

Much of the blame for the weakness in the state's overall job growth can be laid at the feet of the Indianapolis MSA, the state's largest.  Not only has home building and other construction activity tapered off, but the nine-county area's much larger professional and business services sector has taken an unusually harsh beating in the last twelve months.  Job losses in that sector alone have totaled more than 10,000, or about 9.5 percent of payrolls since April 2002.

On the plus side, the other extreme is presented by Elkhart's economy, which has managed to add more than 6,000 jobs to its job totals over the last twelve months.  True to its status as the most manufacturing intensive area in the nation, Elkhart's good fortune has been built upon a double-digit increase in durable goods employment.

As is always the case, these preliminary data can only suggest, not conclusively prove, the direction the state economy is heading.  What they say, however, should cause all of us to pay attention.

Link to this commentary: https://commentaries.cberdata.org/371/is-indiana-s-economy-still-getting-worse

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


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.

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