If you want to know how bad last year was for the Indiana economy, consider this: even the lobbyists in Indianapolis are running out of money. That's a joke, of course, but it has a ring of truth to it. For the economic slowdown that began in the fall of 2000 for the state economy has hit the bottom lines for many businesses in our state -- and their stockholders -- very hard.

It will be some time before we can precisely quantify that statement, but the evidence of the decline in business earnings is all around us. United Way and other charitable campaigns are experiencing difficulty reaching their targets. Business travel and perks like company jets are being slashed and sold off. And declines in corporate profit tax receipts are impacting the operations of state government.

While far from scientific, a straw poll among participants in the Ball State Business Forecasting Roundtable hints at the severity of the downturn. More than half of East Central Indiana area businesses responding reported lower earnings in 2000, with 12 percent suffering losses equal or greater than those incurred during the 1991 recession.

In light of those gloomy reports, it is perhaps surprising that the losses in employment incurred since the downturn began are as mild as they are. While none of us welcome the news that payrolls in the state economy in January were almost 40,000 jobs down from the beginning of 2001, that 1.4 percent decline is a good deal better than what could have been expected, based on what we know about the national economic decline.

The January job report for Indiana is especially relevant, because it also incorporates substantial revisions made to the historical data for the last two years. With the incorporation of more complete source data, the pattern of growth and decline in the state economy emerges with greater clarity. What is most noteworthy is the extremely close correspondence of the Indiana economy, as measured by total employment, and the industrial output of the national economy.

Payroll employment at business establishments in the overall state economy peaked in spring of 2000, at a seasonally adjusted total of just over 3 million workers. That was a full year in advance of the official declaration of the national economic recession, pegged at March of last year. The total number of jobs, which had been growing at about 2 percent per year prior to that time, began a slow, steady decline in early 2000, which has cumulated to about 100,000 jobs through the end of 2001.

That profile of growth and decline corresponds almost perfectly to the output of the manufacturing economy nationwide. The Federal Reserve's Index of Industrial Production for manufacturing shows that factory output peaked in June 2000 and has fallen steadily since.

Is this a coincidence? Few who are knowledgeable about the state economy would think so. The close correspondence of our state economy's health to that of the manufacturing economy is hardly a secret. But the exactness of that linkage, at least as suggested by these data, is still startling. And if it is any guide, all hopes for a turnaround for the state's fortunes in the coming months depend on how quickly the manufacturing sector gets off its sickbed.