After the 2016 election, some people saw sunshine ahead with a return to greatness. Others expected moonless nights with a great nation degraded.
Indiana has few anticipations. We really don’t know Governor-elect Eric Holcomb. Is he the second coming of Mike Pence, as his supporters believed? Or is he Pence 2.0 as the billboards of his opponents declared.
This much we do know, the state’s public relations folks aren’t as enthusiastic about the latest state economic news as they were just six months ago.
Last week the U.S. Bureau of Economic Analysis reported Indiana’s real Gross Domestic Product (affectionately known as GDP, the inflation-adjusted value of goods and services produced in the U.S.) grew in the spring or second quarter of this year by a 1.25 percent annual rate. This was a smidge over the 1.16 percent at which the whole country grew.
We enjoyed a very slim lead over Montana for the honorable 25th place in growth among the states. Contrast this with the ballyhooing last June when Indiana’s GDP growth was reported as first among the nation’s 50 states during the last quarter of 2015.
First. The air up there was so rarified, the height alone caused shivers down the Hoosier spine from South Bend through Plymouth, Kokomo, Franklin, Columbus, Crothersville, all the way to Jeffersonville.
We were “booming” according to Gov. Pence and then-Lt. Gov. Holcomb. However, the thrill was gone when the data was, as usual, revised. Indiana sank from first to 13th place for the fourth quarter in 2015. Now more air is out of the state’s balloon as we dropped to 25th place after the first two quarters of 2016.
Hoosiers still wonder, “How hard was the hit when the recession took us down? How much of a rebound did we have?”
The last peak, before the U.S. and Indiana economies began to contract, was in 2007 quarter four. Then, Indiana ranked 16th in economic size with 1.92 percent of the nation’s output. By the bottom of the recession, in 2009 quarter two, Indiana had lost $27 billion in constant 2009 dollars, or 9.5 percent of its pre-recession output. During the same six quarters, the nation’s GDP fell only 4.2 percent.
Since that economic trough, Indiana’s GDP grew by 17.2 percent, helping us retain 16th place in size, but with a slightly smaller share of the nation’s total output, which grew by 14 percent. Over the course of this business cycle, Indiana’s real GDP grew by only 6 percent compared with the U.S. advance of 9 percent.
If we feel we’ve been on a roller coaster, but not gone far, it’s true. Our decline was the fifth most severe in the nation, but our upward movement since then has been the 10th strongest. Only Michigan had a more dramatic fall and bounce back.
Less volatility might be soothing, but our total experience was better than that of 23 other states and far better than the three least volatile states: Louisiana, Maine and Mississippi.
Morton Marcus is an economist, writer and speaker who may be reached at [email protected].
