Indiana has been in recession since late last year but is on a trajectory to climb out this fall, according to Moody’s Economy.com, a national forecasting company.
A computer model based on employment and industrial production also shows that the manufacturing-intensive metro areas of Anderson, Muncie, Elkhart and Michigan City are in recession, Economy.com said. Indianapolis is in an expansion mode.
Indiana’s woes trace to Detroit automakers, which are retrenching in the face of competition from foreign companies by laying off workers and closing factories. Their suppliers, including Delphi Corp. and Visteon Corp. have responded with their own rounds of layoffs and closings.
“Overall, the state is being heavily influenced by the downturn in manufacturing,” said Economy.com associate economist Arnold Slesers. “Right now the outlook doesn’t look good for manufacturing.”
Only three other states are in recession, the company said: Michigan, Ohio and Wisconsin.
The Associated Press reported today that many economists believe tightening credit resulting from the subprime housing bust and uncertainty on Wall Street have boosted the chances of a national recession to one-in-three from one-in-six a few weeks ago.
Economy.com uses a different formula to determine a recession, which is defined by most economists as two consecutive quarters of contracting gross domestic product.
Indiana employment has been flat at just below 3 million for more than a year-slightly short of record levels set in 2000.
Manufacturing is a different story. After peaking at 672,000 jobs seven years ago, employment declined precipitously early in the decade, then leveled off for a couple of years only to resume a slow decline. The seasonally adjusted figure stood at 556,700 in June, the latest month for which data is available.
An economist who has followed the state economy for more than a decade disagrees with the recession assessment.
Indiana is closer to recession than it was a year or two ago, said Patrick Barkey, who directed the Bureau of Business Research at Ball State University until recently, but still follows the state’s economy. Yet, the state will not slide into recession unless the national economy does, he predicated.
“It’s a borderline call,” Barkey said. “I think they’re wrong.”