Indiana Model of Indiana
Summary of Current Forecast: August 2009
Our current forecast for the Indiana Economy is similar to our May outlook, especially with respect to employment.
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. Employment in the state continues to lag the nation.
Baseline forecast
Relative to our May forecast, our current outlook for income is more pessimistic for the upcoming year. This is largely due to a similar change in our national outlook. Including three quarters already achieved, we now expect income to register five quarters of decline. Over the next year our outlook has the absolute level of Indiana income essentially unchanged. For the U.S. as a whole, by contrast, we expect income to grow by about one percent.
Our employment forecast is on par with the May forecast. Employment is expected to drop through early next year with unemployment reaching around 10.9%. At that point total job loss exceeds 195 thousand (6.6% of pre-recession peak employment). Since the third quarter of 2007, Indiana employment has been declining at a rate of 86 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 has been losing ground relative to the U.S. as a whole, and our forecast is that this discouraging pattern will continue. Especially with regard to employment, the recession will continue to hit Indiana hard over the rest of this year.
