We hear from so many people about the rapid pace of change, how change may be resisted, but is, nonetheless, irresistible. Sometimes, the very people who talk most about the need for change are those who most want to roll back the change they have seen.
This talk about change has us considering how change can be measured in our economy. What’s the best time period to consider? Is a year too short? Is a decade too long or is it also too short?
What kind of changes should we examine? Is it the number of changes or the speed of adoption of change? Changes in what we do, how we do it, where we do what we do? We don’t know the answers, but here’s something to try:
Let’s look at the changes in the economy as measured by gross domestic product (GDP). That’s what “experts” anticipate and follow every calendar quarter. They must be ready to produce ponderous pronouncements about the health and direction of the national and states economies.
How much structural change did we experience in the past 10 years? The distribution of GDP among 15 sectors of the U.S. economy changed by only 5 percent over that period; Indiana (with 4.6 percent change) and all its neighbors had less change than the nation. Michigan and Illinois both had less structural change than Indiana.
Between 2005 and 2015, the national economy grew at an average annual rate of 1.2 percent after adjustment for inflation. The oil boom allowed North Dakota (6.5 percent growth per year) to lead the country, while the housing bust pushed Nevada to the back of the pack (-0.4 percent over the decade).
In all, 46 of our 50 states grew from ’05 to ’15; Indiana nestled comfortably in 25th place with a 1.0 percent annual growth rate. Only 18 states grew faster than the national average and enjoyed an increased share of the country’s GDP. Indiana was not in that happy group. Texas led the U.S. by increasing its share of GDP from 7.4 percent in ’05 to 9.2 percent in ’15.
Indiana’s best performing sector in this period was non-durable manufacturing with 2.4 percent average annual growth rate.
Unfortunately, this sector was in decline for the decade. What does it mean if your best performance is in a declining sector?
We might hope to be better than average in growing sectors.
The information sector of the economy was the fastest growing nationally with a 3.5 percent annual growth rate. Indiana managed only a 1.1 percent increase which ranked 44th in the U.S.
The health sector was second in its growth rate across the nation, but Indiana’s growth helped us achieve only the 31st place among the 50 states.
Overall, it doesn’t seem that change is overpowering Indiana. It might be we don’t want to be challenged by opportunity.
Morton Marcus is an economist, formerly with the Indiana University Kelley School of Business. Send comments to [email protected].