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INDIANA UPDATE:
IU REPORT: INDIANA ECONOMY
CONTINUED TO ADVANCE IN 1996
BLOOMINGTON, Ind. -- Indiana benefitted in 1996 from a strong national economy that continued to purchase the state's durable goods products and from improved earnings for its farmers, according to a new Indiana University School of Business report.
Earnings of Hoosiers grew by 4.9 percent between the final quarters of 1995 and 1996, according to a report in the June issue of Indiana Business Review Update. Indiana's performance outpaced the nation's 3.8 percent increase and was better than that of any of its neighboring states.
"This strong performance for Indiana in 1996, and particularly in the fourth quarter, resulted from higher farm product prices and strong consumer and business spending on investment goods," said Morton J. Marcus, director of the Indiana Business Research Center at IU and author of the report. "Housing, autos, and other durables, made in or using parts made in Indiana, led the nation's economic advance and the Hoosier state benefited."
The largest contributor to the state's earnings growth came from manufacturing, which added $1.6 billion to the state's total $6.6 billion increase in earnings, constituting 23.6 percent of that increase.
The IU report said farming led all economic sectors with a 662 percent increase from abysmal results in 1995. This activity captured more than 6 percent of the increase in farm earnings experienced nationally. However, the $845 million added by farming in Indiana was less than that added to earnings growth by services and state and local governments.
Indiana ranked 14th nationally in terms of earnings growth. States dominated by farming -- including North and South Dakota, Nevada, Nebraska and Iowa -- led the nation, while the District of Columbia, Hawaii and Rhode Island saw their earnings decline the most. California, Texas and Florida had the greatest increase in their share of the nation's earnings.
Indiana's economic results for the year were enhanced by a solid performance in the fourth quarter. Growth in state earnings during the final three months of 1996 brought the state's share of U.S. earnings back to 2.11 percent and continued progress that Indiana has made since a year-long slide in 1995.
Earnings in Indiana grew at an annual rate of 5 percent in the fourth quarter, compared to a 3.8 percent rate for the nation, placing it among the top eight states in the nation during that period. Neighboring states Illinois, with a rate of 3.3 percent; Michigan, 2.8 percent; Ohio, 2.7 percent; and Kentucky, 0.7 percent, each failed to match the national rate.
The state's share of the nation's earnings growth was 2.5 percent, which was well above its 2.1 percent of total earnings. Manufacturing and state and local government earnings each accounted for more than 4 percent of the nation's growth in those sectors.
While Indiana has benefited greatly from the increased sales of cars, appliances and other big-ticket items, this factor could also negatively affect the state as well.
"Should rising interest rates dampen demand for those goods, Indiana will feel the consequences," said Marcus, who also is author of the new book, Tightrope to Tomorrow: Tensions, Productivity and Public Education (Technos Press, 1997).
Also in the June issue of Indiana Business Review Update is data concerning employment in Indiana and neighboring states. While earnings in Indiana have risen, the state lags behind its neighbors and ranks 41st in terms of number of persons employed. Between March 1996 and 1997, the number of persons employed in Indiana grew only by 1.21 percent.
By comparison, employment in Kentucky grew by 3.17 percent; in Michigan, by 2.87 percent; in Ohio, 2.64 percent; and in Illinois, 1.24 percent. Nationally, the number of persons employed grew by 2.51 percent.
More details about the state's economic performance, Indiana Update and other state data are available on the Indiana Business Research Center's Web site, located at http://www.iupui.edu/it/ibrc
For more information, contact George Vlahakis, 812-855-0846 or 812-855-3911, gvlahaki@indiana.edu