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If
there is anyone still out there who thinks the
U.S.
economy is
sick, direct them to the Bureau of Economic Analysis's report on
third quarter Gross
Domestic Product. The
BEA took an already-high estimate of overall economic growth and
made it even higher. The
newly revised 8.2 percent growth rate in the economy during the
July-September period easily eclipses anything we've seen in the
past nineteen years.
But many of us in
Indiana
aren't
breaking out the party hats quite yet.
Economic news in our state is still dominated by reports of
tax revenue shortfalls, shuttering manufacturing facilities, and
poor grades on economic report cards.
The change in tone, if anything, when one changes subjects
from the national to the state level economy, suggests that we are
following a different path than the rest of the country.
The truth is a little more complicated than that.
We're not seeing anything like 8.2 percent growth in the
Indiana
economy
right now, that's for sure. But
that's because the data on Gross Domestic Product -- which make the
national economy look so good -- aren't available for states and
regions.
Gross
State
Product,
which comes closest to capturing the same concept for states as GDP
does for the nation, becomes available only after a lag of almost
three years.
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If
those data were available today, what would it show?
For
Indiana
, there's every
reason to believe that it would show strong growth in the state economy,
happening right now under our feet.
That's just a guess, of course, but it's probably a pretty good
one. That's because two
segments of the national economy that are catching fire right now --
business investment and exports -- are the bread and butter for our
state's major industries.
By growth I mean growth in output, not employment.
Here, also,
Indiana
is undoubtedly
on the same path as the national economy.
Two consecutive quarters of galloping growth in labor
productivity at the national level has helped the economy produce more
output with only modest increases in the labor force.
Some have called it a jobless recovery, although the recent surge
in hiring should soon put this term to rest.
If we had that same kind of data for the state economy, it would
undoubtedly show the very same thing.
If anything, the productivity increases in the
Indiana
labor force
might even be higher, given the highly competitive markets our state's
manufacturers operate in. These
are "good news" stories about the
Indiana
economy --
growth in output and growth in productivity -- that we are unable to
tell because we don't have the data to back them up.
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The
most timely and relevant data we do have for the state of
Indiana
are for payroll
employment. And those
data have shown some improvement in recent months.
For three of the last four months, job counts reported by
Indiana
employers have
shown modest increases. On a
seasonally adjusted basis, payroll employment is up by almost 40,000
jobs from the low point of July of this year.
But making the call on
Indiana
's economic
recovery based on employment data is a little like finding your way
driving by looking at your rear-view mirror.
By the time we see it, it will already be history.
That's the way it is for those of us who track state and regional
economies.
There's a larger point in this as well.
Whenever and however the
Indiana
economy
recovers from the 2001 recession, there will still be problems to solve.
The job gains we all look for to tell us that the downturn is
over will, in reality, just help get us back to where we were.
As the last twenty years have demonstrated, we need to get
"better" when we are well just as badly as when we are sick.
Patrick M. Barkey
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