Insurance and Economy and Manufacturing & Technology

EYE ON THE PIE: Hoosiers are not getting full truth

July 2, 2007

Goodnews serves up economic and business reports about Indiana. Recently, I read his draft press release:

"Indiana's personal income rose to $211.1 billion in the first quarter of 2007. That is an increase of $8.2 billion, more than 4 percent in the past year."

"Is that it?" I asked.

"Those are the latest facts from the U.S. Bureau of Economic Analysis," he said. "Anything else would be putting a spin on the basic truth."

"Goodie," I said, using his nickname, "there's much more to that story."

"Most newspapers don't care," he responded. "They mimic the lack of depth achieved by TV reporting. And what is to be gained by knowing more? Readers and viewers are fascinated by death, regardless of where it occurs. They should not be offered interpretation and perspective of the news when polls show they are not interested.

"But," I protested, "aren't you going to point out that during that same year, Indiana's 4-percent growth was behind the nation's 5.7-percent increase? Isn't it worth mentioning that the Hoosier state ranked 47th among the 50 states in personal-income growth from the first quarter last year to that same quarter this year?"

"That's just more of the same defeatist statistical manipulation of reality," Goodie said. "Everyone knows of our advances. The pot of prosperity is perking."

"Look," I argued, "nationally, financial and insurance services accounted for 38 percent of personal income growth in the latest quarter. Only seven states grew faster than the nation. Six of these (New York, Connecticut, New Jersey, Illinois, Delaware and Massachusetts) saw the major part of their growth in financial and insurance services. (Continued growth in mining kept Wyoming growing rapidly.) In Indiana, those services were less than 10 percent of our growth. We had 14.7 percent of our growth coming from manufacturing while the nation realized just 5.3 percent of its growth from that sector."

"So?" Goodie said.

"So?" I sneered. "Don't you see that our mix of existing businesses is different from the rest of the country? We should be asking ourselves if there are policies or practices in Indiana that keep us from developing in the business sectors that are leading the nation's growth. At the same time, we should be doing all we can to advance the sectors in which we are already strong."

"Aren't we doing that?" Goodie asked.

"Where have you been living?" I asked. "Don't you recall that a major growth sector for Indiana is gambling, the darling of the Legislature? But we are not keeping pace with the nation in fast-growing professional and technical services."

"Hey, we don't have problems in our economy," Goodie said. "Our May unemployment rate was just 4.5 percent and that's the best this state has seen in a long time."

"Yes," I said, "but that's not the full story. The number of people with jobs fell by 27,500 during the past year. However, those numbers do not show up as unemployed people. It seems they dropped out of the labor force because the number of unemployed people declined by 21,700. What happened to them? They, too, dropped out of the labor force. In total, we had 49,200 fewer people in the Indiana labor force in May 2007 than a year earlier. Can you call that an improving economy, Mr. Goodnews?"

"You're making a mockery of the good news," Goodie bleated.

"No," I said, "you are ignoring the truth and pandering to AHH-the Association of Happy Hoosiers."



Marcus taught economics for more than 30 years at Indiana University and is the former director of IU's Business Research Center. His column appears weekly. To comment on this column, go to IBJ Forum at www.ibj.comor send e-mail to mortonjmarcus@yahoo.com.
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