Why I don't like having to do a forecast for my local economy
I spent most of my day working on a presentation on the economic outlook for northwest Indiana, the 13th time I've done this. It seems like 13 versions of the same thing...northwest Indiana will grow more slowly over the next year than will the state of Indiana, which will grow more slowly than the nation. Sometimes I think I should just record my comments and play them next year.
But northwest Indiana has not done well since the steel industry collapsed in 1979. Oh, the steel industry has done well, but it has done well by shedding jobs, and the profits from that have gone elsewhere.
Population growth has all but ended. From 1900 to 1980, the population grew at an average annual rate of 2.2%; since 1980, it's grown at an average annual rate of 0.1%; since 1980, the region has added only 25,000 to its population, which, in 1980, was about 828,000.
Payroll employment has grown, since 1990, at an average annual rate of 0.14%. Now, I grant that we're still trying to climb out of a recession, but the average annual growth from 1990 to the December 2007 peak was a whopping 0.65%. Now, that's exciting. We added, from 1990 to the pre-recession peak, only 31,800 jobs (starting at 255,900).
And household employment is, if anything even less thrilling. Employment grew at an average annoual rate of 0.3% from 1990 to 2007, and has declined by 5.2% since the US economy hit bottom in June 2009. Using the household measure of employment, we have about 5,000 fewer jobs than we did in January 1990--and, because of seasonal factors, January is a bad month around here.
Growth in real per capita income hasn't been all that bad--average annual growth of 1.2%, compared with 1.5% for the nation since 1969 (through 2008). But growth since the beginning of the collapse of the steel industry has been only 0.8% per year, while the US PCI has grown at a 1.7%. Average annual compensation in non-farm employment has grown a total of 1.4% between 2001 and 2009--an average annual rate of 0.2% per year. Which is actually better than the US as a whole (average annnual compensation has declined by about 0.5% between 2001 and 2008).
So I'm trying to figure out what I'm going to say that won't be too depressing...