Marcus
This week, we move deeper in Indiana’s economy, down the gross domestic product (GDP) rabbit hole into the sectors of that economy.
Recall, we use the 2019 GDP, the sum of all the goods and services produced in Indiana, because 2020 and 2021 were impacted by the COVID pandemic. We think 2019 is more reliable picture of our Hoosier economy.
_How many economic sectors are in Indiana? You could say two: The private and the public sectors, if you’re thinking of ownership. Or two, goods and services, if you’re thinking about material substances vs. what people do more directly for you.
We’re dividing the economy into 21 sectors and accepting the ambiguity of those sector names.
_Isn’t manufacturing the biggest sector in Indiana? Yes, even when we divide it into durable and non-durable goods. The Bureau of Economic Analysis (BEA) defines durable goods as “Tangible products that can be stored or inventoried and that have an average life of at least three years.” BEA defines non-durable goods exactly the same, except having an average life of less than three years.
Durable manufacturing accounted for $58.3 billon, or 15.3%, of Indiana’s $381 billion total 2019 GDP. Non-durables were second at $40.9 billion, or 10.7%. Together, they’re 26% of Hoosier GDP, but separately they reflect many different production processes, logistical needs, and environmental challenges; that’s a discussion another time.
So health care’s next in third place? No. Healthcare and social assistance services ranked fifth in Indiana’s GDP at $32.4 billion, or 8.5%.
Then government’s in third place? Local, state and federal governments together, including public colleges and universities, produced $36.5 billion, or 9.6% of our GDP, good enough for fourth place, but not for third place.
That honor went to real estate, renting and leasing at $39.7 billion, or 10.4% of Indiana’s GDP. Renting and leasing are big businesses involving houses, apartments, offices, cars, tools, earth moving equipment, RVs, not to mention all those real estate agents eager to help you buy or sell your home.
Where’s the other 46% of GDP beyond those Big Five? Surprising to Hoosiers, Indiana’s agriculture, forestry, fishing (ranked 20th), plus mining, quarrying, oil & gas extraction (ranked 21st), all together accounted for $4.3 billion, 1.1% of our GDP. That’s about tied with arts, entertainment, and recreation (ranked 18th), also 1.1% of GDP.
Banking? Finance and insurance contributed 6%, or $23 billion, to GDP to secure sixth place in Indiana.
Retail? That was $20.2 billion, or 5.3%, taking eighth place, behind wholesale trade, at $22 billion, but leading construction at $17 billion.
Transportation was warehousing made up $13.4 billion or 3.5% in 11th place.
Then? Yes, Hanover, Wabash, DePauw, Notre Dame, and other private schools accounted for 1.1%, or $4.1 billion, of the state’s GDP.
We’ll go further into Wonderland next week. Pack a lunch.
Morton Marcus is an economist. Follow him and John Guy on Who Gets What? wherever podcasts are available or at mortonjohn.libsyn.com. Send comments to [email protected].
