A few days ago, the U.S. Bureau of Economic Analysis released the 2015 Gross Domestic Product (GDP) figures for all 382 metropolitan areas of the nation. Of these, 10 are exclusively within Indiana and five others (Chicago, South Bend, Cincinnati, Louisville and Evansville) include one or more Indiana counties.
How are these 15 metro areas doing since the Great Recession ended in 2010? In a word: poorly. What kind of recovery have they had compared to the rest of America? Weak.
Hoosier politicians of both parties love to celebrate urban areas as the engines of economic growth while declaring that our rural communities protect something called “Hoosier values.” Collectively, our 15 metro areas grew at a slower rate than American metros as a group every year for the past five years. Does being “business-friendly” mean Indiana retards business growth?
The average annual rate of growth in real GDP for Indiana metros from 2011 through 2015 was 1.56 percent compared with a national metro growth rate of 1.90 percent.
“Hey, Morton,” I hear Myrtle, my Muse, calling from the void, “What’s the big deal about growing 1.90 percent vs 1.56 percent over five years?”
“Don’t they teach you any math at Muse School?” I reply. “Those are averages of annual growth rates. Let’s put it in dollars since percentages seem to puzzle you.
“Real GDP for the 15 Indiana metros grew by $72 billion from 2010 to 2015. If our metro areas had grown at the national rate, which itself was pathetically low, we would have added $88 billion to the economies of metro areas from Chicago and South Bend to Cincinnati and Louisville, and from Fort Wayne to Evansville. That would have been an improvement of $16 billion (22 percent) in our GDP for just being average or mediocre.
“I’ll tell you the story in still a different way,” I say. “Of our 15 metro areas, only four beat the national growth rate. Those were Elkhart-Goshen, Columbus, Kokomo and Cincinnati. The other 11 were even slower growing than the national average. In fact, of those 382 metros, only 107 (or 28 percent) managed to beat the national average. This suggests that growing income inequality among metro areas may be as important as the income inequality among households.”
“OK,” Myrtle mutters, “so who’s at the bottom of the growth heap?”
“This may surprise you,” I say. “Terre Haute, Bloomington, Michigan City-LaPorte and Evansville all had negative average annual growth rates. All four ranked in the bottom 16 percent of U.S. metro areas.
“While Columbus ranked third in the whole country by moving from 305th largest metro economy to 274th, a climb of 31 steps, Terre Haute fell from 236th to 248th and Bloomington from 240th to 250th. Changes in rank like those are rare and dramatic.”
Morton Marcus is an economist, writer and speaker who can be reached at email@example.com.