Horace Heliotrope sees the world in terms of persistent sadness. I’m not qualified to say he is clinically depressed, but he isn’t a happy fellow.

“The economy is as bad as we’ve seen in our lifetimes,” Horace said to me as we stood in line at the superstore checkout.

“No,” I said as cheerfully as I could. “The recession is over. The downward movement in the economy, the contraction in employment, output and income is yesterday’s story. That does not mean we are out of the ditch or that we are back to where we were before the recession. Now is a time of slow upward movement, a period of recovery.”

“Won’t last,” Horace intoned with a funereal certainty. “We’re going to have a double or triple dip; the worst is yet to come.”

“I don’t think so,” I said.

“Inflation is coming,” he announced to one and all, without raising his voice.

“Maybe,” I said, “but it may not be serious this time around.”

“Our state economy is ruined; Indiana will never be the same,” Horace proclaimed.

“Not so,” I said. “Indiana has fared fairly well in this recession. The personal income figures released last week by the U.S. Bureau of Economic Analysis show that Indiana had a 1.2-percent increase in the first quarter of this year compared with a 0.9-percent pickup in the nation. That put us in 16th place among the 50 states.

“Furthermore,” I continued, as Horace unloaded his cart onto the checkout conveyor belt, “we also ranked 16th over the past year in personal-income growth (2.6 percent for us, 1.9 for the nation). In fact, if you look at where we are now and where we started into the recession (2008 second quarter), we’re just 0.4-percent off our peak level of personal income. The United States as a whole is 0.9-percent off its peak (not accounting for inflation). Not only is Indiana in better shape than the country, but we also beat out Ohio, Michigan, Illinois and Wisconsin—the other four states of the Great Lakes region.”

“Since when did you join the Daniels administration?” Horace asked.

“The facts are the facts,” I said. “What we should be asking is: How did all this come about?”

“So,” he asked, “how did all this come about?”

“The big, bad federal government,” I responded. “They pumped $6.3 billion into the Indiana economy through higher unemployment compensation and increased Social Security and Medicare payments. This offset entirely the decline of workers’ earnings from the second quarter of 2008 to the first quarter of this year.”

“Yeah,” Horace admitted, “but that wasn’t the stimulus money.”

“The fact is that it stimulated our economy,” I said. “You know, I’d like to see somebody put a label on every can of beans bought with unemployment compensation. I’d like to see every teacher’s or firefighter’s paycheck stamped ‘Stimulus Money Used Here.’

“How about detailing just how many dollars went to doctors, nurses, pharmacies and hospitals in the state from added Medicare and Medicaid funds paid out by the federal government? Without knowing it, many thousands of Hoosiers kept their jobs because of added direct federal spending or added federal funds flowing through state and local governments.”

“Just as I thought,” Horace said as he paid for his purchases. “Things could have been much worse, which means things were much worse than most of us realized.”

“That’s right,” I agreed, stacking my purchases on the checkout counter. “Without the stimulus money and the ongoing federal income and health maintenance funding, we would have been in a terrible mess.”

Horace looked at me with his Bassett-hound eyes. “No matter how well things seem to be going, you have to anticipate the lurking danger.”

I returned his visual challenge and said, “At minimum, we should give Uncle Sam the credit he is due.”• 

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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. He can be reached at mmarcus@ibj.com.