MARCUS: Today’s data tell yesterday's story

Related Photos

Discussion

October 21, 2009

BY MORTON MARCUS The News and Tribune Wed Oct 21, 2009, 01:41 AM EDT

Most economists are of the opinion that we have seen the bottom of the recession and are in recovery mode. However, the evidence is scarce to support that position.

There are signs here and there, fragments of data, and stories galore. But solid evidence has yet to arrive.

We are finding out what the bottom looked like, assuming that the second quarter of this year was the bottom. This is like getting the pictures of your vacation a few months after you enjoyed the experience. So let’s take a walk down memory lane.

Last week the U.S. Bureau of Economic Analysis released the latest personal income estimates for the U.S. and the 50 states. The second quarter of 2009 — known to friends as ’09.2 — showed an increase of 0.2 percent for the nation. This infinitesimal increase was far better than the 2.3 percent drop in ’09.1 and was most welcome after three consecutive quarters of decline.

Indiana fared well in these data. At 0.5 percent we ranked 16th in the nation among the 37 states that saw personal income rise in ’09.2. But don’t break out the champagne yet. For both the nation and Indiana these data are correct but illusory.

Personal income includes unemployment compensation. This is a good idea if you want to measure consumers’ buying power. In ’09.2, unemployment insurance payments — known as UI among those who care — in the U.S. and Indiana rose by 45 percent as more people lost jobs. This made UI in Indiana — $3.6 billion at an annual rate — greater than the contributions to personal income from farming and mining combined.

It was that 45 percent growth in unemployment compensation that accounted for the advance in the nation’s personal income. If our interest is economic activity, then earnings — what people are paid working for themselves or for someone else — is probably the best measure we can get at the state and local level.

Since 1997, earnings in Indiana and the U.S. averaged 76 percent of personal income. Where personal income rose slightly in ’09.2 at the national level, earnings fell by 1 percent; Indiana saw a decline of 1.2 percent. Over the past year, earnings in the U.S. fell by 4.2 percent; 5.7 percent in Indiana. That decline left the Hoosier State fifth from the bottom among the state, just ahead of Connecticut.

Earnings peaked in Indiana during ’08.1 whereas the national peak was two quarters later. We entered this recession half a year before the nation did. There were nine other states that peaked when we did including none of our neighboring states. Florida, Idaho and Nevada, where housing speculation was rampant, peaked one quarter before Indiana. Michigan peaked before all other states in ’07.3, a year before the nation. Twenty four states combined to give the nation its peak in earnings during ’08.3 and nine peaked a quarter later.

This pattern of scatted peaks is important because it shows how dissimilar the states are. We may expect to find scattered starts to the recovery. Not that Michigan and Indiana will recover before the nation, but that many states will rise before the mass of states and a few will trail.

That same disparity will exist among sectors of the economy. Some will lead and others will follow. The result is that many people will not see the recovery in its earliest stages and will deny its existence. Those who witness a change in the economy before others are the true-believers. The rest remain agnostic for a few quarters longer.

Morton Marcus is an independent economist, speaker and writer formerly with IU’s Kelley School of Business. Reach him at mortonjmarcus@yahoo.com

Text Only | Photo Reprints

Business/Money

A checkup for the community: Assessment tells health story of Floyd, surrounding counties
This report is a compilation of health and quality of life indicators for Floyd County. The report indicates that in Floyd County cancers, heart disease, obesity and smoking are growing problems.

May 21, 2012
Rebuild Marysville event raises money for town hit by tornado
Kirsty Travelstead of Marysville explained that as of Saturday morning, more than 300 T-shirts had been sold. For the event they had hopes of raising at least $5,000 from the T-shirts, food sales and the grill raffle.

May 21, 2012 2 Photos
New Albany City Council defeats bridges resolution
But Gonder said residents, especially those from Southern Indiana, will be struck the hardest by an inflated project cost of $2.6 billion that relies on tolling.
“We wouldn’t be in this fix if we were only going to build the east-end bridge,” he said.

May 18, 2012 1 Photo
Local officials react to proposed TARC cuts
The fare increases will raise a one-way adult fare from $1.50 to $1.75 and a monthly pass would increase from $42 to $50. TARC has not raised its base fare since 2008. The proposed rates are in line with public transportation fares charged in Indianapolis and Cincinnati, where one-way adult fare is already $1.75.

May 18, 2012
Jeffersonville’s Victorian Chautauqua set for weekend
Part of the event’s success is due to the fact that it hasn’t become overgrown during the last two decades, she said. Further, exhibitors and entertainment are always well received.

May 18, 2012
A night of thanks: Lady Antebellum event raises $285,000 for Henryville
May 17, 2012 6 Photos
Accent shows off new facility in Jeffersonville
Wednesday’s event was a formality in most aspects, as the building has actually been open since late March. However, it did mark a significant milestone for the Jeffersonville Town Center — a proposed shopping development that has struggled to attract commercial growth in the many years it’s been planned on Jeffersonville’s Veterans Parkway.

May 17, 2012 1 Photo
Economy not out of the woods yet, economists say
“Last November, I thought I was very optimistic, we were seeing some positive growths,” Dufrene said. “But right now, I think the outlook is more uncertain.”

May 17, 2012 1 Photo
Floyd County preparing for busy road season
Recently, a void on the side of the payment was spotted at the top of Spickert Knob Road. The road was repaired and reopened last December.

May 16, 2012
Treasure hunt: Attorney General explains how to find unclaimed property
Unclaimed property includes investment earnings, insurance proceeds and benefits, wages and money from bank accounts. It does not include real estate, abandoned vehicles or other such items.

May 16, 2012
More Business/Money Headlines

Business/Money

Search Results

Related Photos

Discussion

MARCUS: Today’s data tell yesterday's story

Site Map

Contact Us