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EYE ON THE PIE: There is no joy in latest county data

May 5, 2008

Cynthia Cyphon called me for "insights" on the latest county statistics released by the Bureau of Economic Analysis.

"So what's doing with these numbers?" she asked. "I see Hamilton County, the state's wealthiest county, is not anymore."

I went out on the deck with my lapdog and my laptop. This was going to be a long phone conversation.

"Cynthia, get your head around this," I said. "Per-capita personal income is used widely as an indicator of economic wellbeing. That's why you're calling." (I heard a grunt of assent from the other end.)

"But we often forget what PCPI is. It's a fraction where personal income is divided by population. Personal income includes wages and salaries, the income of proprietors, plus employer-provided health insurance, dividends and interest income, Social Security benefits, and other types of income. It reflects income from current production and excludes sales out of last year's crops, capital gains or cashing in retirement accounts. It is not the same as taxable or disposable income."

"Yeah, yeah," Cynthia said. "Just give me the headline stuff, not the footnotes."

"OK," I said. "Boone County has replaced Hamilton as the state leader in PCPI. Where Indiana's PCPI is 12.1-percent below the national average, Boone's is almost 27-percent higher than the country's, and Hamilton's is right behind at 24-percent above the nation's. Actually, Hamilton had the worst record in the state for PCPI growth over the past six years. It had an annual average 1.4-percent decrease, adjusted for inflation, compared to statewide growth of 0.6 percent and 1.2 percent for the United States."

"Good stuff," Cynthia said. "Anytime the leader falls, most folks feel good."

"Wait," I said, "all is not as it seems. With an inflation-adjusted 3.8-percent annual growth rate for personal income from 2000 to 2006, Hamilton County was the secondfastest-growing county in the state.

"Boone led, at 4.0 percent. But Hamilton was also the state leader in population growth (5.3 percent). Here, Hendricks held second place at 3.6 percent.

"Since PCPI is a fraction with population on the bottom, a fast-rising population will slow PCPI growth, while slow increases or declines in population can make PCPI grow rapidly. Hamilton County 'suffered' from a population growth rate that exceeded its personal income growth and thus had that 1.4-percent decline in PCPI.

"Tell me more," she implored.

"Well," I said ponderously, "In 2006, PCPI in Indiana grew 1.7 percent and in the nation 2.6 percent, after adjustment for inflation. Orange, Newton and Daviess counties led the state in growth of PCPI in 2006. Yet, for the five years ending in 2006, Orange County ranked 66th in the state, with no real PCPI growth."

"Fine," Cynthia said. "Now get to the big finale."

I studied the numbers before saying, "In 2006, 27 Indiana counties had lower PCPI than in 2000. In 2006, seven of Indiana's 92 counties had PCPI above the national average. In 2000, the number was nine; Bartholomew and Hendricks lost their honored positions. Put another way, 92 percent of Indiana's counties have PCPI below the national average. On top of that, between 2000 and 2006, 72 Indiana counties lost ground compared to the nation, while only 20 gained on that average."

"So you're saying?" Cynthia asked.

"I'm saying goodbye. The numbers speak for themselves. Now I'll collect the dog and go back under my rock," I said, hanging up. She'll call again, someday.



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.
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