Indiana Model of Indiana
Summary of Current Forecast: November 2009
Our current forecast for the Indiana Economy is similar to our August outlook..
Data
Over the past four years the Indiana economy has mostly fallen short of the U.S. economy with respect to both personal income and employment. However, the recession (2007:4 to present) worsened the U.S. personal income growth relative to Indiana, and recently state income growth has slightly outperformed the U.S. The release of second quarter income data for the state contained a fairly significant upward revision to the values of income. Employment in the state continues to lag the nation.
Baseline forecast
Relative to our August forecast, our current outlook for income is more optimistic for the upcoming year. This is largely partly to the upward revision to the historical data. Including three quarters already achieved, we now expect income to register five quarters of decline. Over the next year our outlook has the level of Indiana income increasing by just under three percent. This is slightly above the national rate..
Our new employment forecast is more pessimistic than in August. Employment is expected to continue to decline through the first part of next year with unemployment rising back above 10%. At the low point we expect total job loss to be about 200 thousand (6.7% of pre-recession peak employment). Since the third quarter of 2007, Indiana employment has been declining at a rate of 91 thousand per year. For comparison, during the period 1991-2006 the state economy gained an average of almost 29 thousand jobs per year.
Summary
The Indiana economy often gains a little ground relative to the U.S. during the early stages of recovery from recessionas, and our forecast is that this pattern will repeat. However, especially with regard to employment, the situation will continue to be difficult over the upcoming several quarters.
