Marcus
The most important economic measure is not jobs, wages or taxes. It is that portion of the Gross Domestic Product, or GDP, produced by the private sector. Our jobs, our wages and our taxes are directly related to GDP. What we make and what we do determines how we live.
Over the past ten years, from 2011 to 2021, Indiana’s GDP — not adjusted for price changes — grew by 42%. Indiana is 30th in the nation, which advanced by 52%. But we’re happy — Kentucky was 31st, Wisconsin 33rd, Illinois 37th!
Those data tell the surface story of our comparative growth. Yet, when we look deeper, the tale gets no better.
Yes, Indiana is a manufacturing state, the fifth largest manufacturing state in the nation. But manufacturing in the U.S. grew by 33% when the whole economy was growing by 52%. Indiana’s growth in manufacturing was 26%, 36th in the nation.
But we’re happy — Ohio was 37th and Illinois 42nd!
Within manufacturing nationally, the shift of relative growth and decline among 19 major industrial sectors was a modest 6.7%. Indiana’s shift was 13.0%, almost double the national pace of turbulence among the sectors.
Perhaps the most successful Hoosier manufacturing sector was primary metals, or steel and aluminum, where Indiana ranked first in total GDP and first in the amount of growth. In the rate of growth, we ranked a respectable 12th at 70%, while the nation could muster only a 23% growth rate.
Primary metals raise an interesting question. Is it better to be leading in a lagging industry or should we aim to improve our lagging performance in a leading industry?
For example, once upon a time, Indiana was a leader in what today is called computer and electronic products as well as electrical equipment, appliances and components. The names of companies now gone or greatly reduced are to be found in the homes and memories of many.
Hoosier computer and electronic product firms saw a decline in GDP between 2011 and 2021 of 7.4% ranking 40th among the states, while that industry grew by 40.5%.
Likewise, electrical equipment, appliances and component manufacturing also advanced in the U.S. by a matching 40.0%; in Indiana, the industry managed a 15.5% increase, coming in 33rd in the nation.
Attention will soon be on motor vehicles, bodies, trailers and parts as electric cars and trucks overtake the petroleum putt-putts of today. Indiana ranked second in GDP in this sector in both 2011 and 2022.
Our growth rate, however, was low in the top half of all states at 21st. Indiana grew by 57%, somewhat ahead of the U.S. rate of 52%. But if EVs are the future, how do we get into the top 10? Or are we content to be in the top half as long as our neighbors are not out performing us?
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].
