Anderson.

• Author: Ritchey, Barry C.

This year, the local economy is driven by events at the national level. The biggest part of the story is the national economic slowdown. For Anderson and Madison County, the most volatile component of the local economy is the automotive manufacturing sector. Typically, when national recessions hit, Anderson's local economy is driven into the depths of the national trough. Whether the national recession is mild or severe, we have had some difficult experiences with unemployment and falling income as a result of our reliance on the automotive industry. Since the recession of 1981-82, that volatility has been changing.

Unemployment in the county has been following the national trend, with increases in 2001 and 2002 (see Figure 1). Madison County's unemployment in 2001 rose to an average of 4.6 percent, an increase over 2000 but lower than the U.S. unemployment rate of 4.8 percent in 2001. With the economy slowing down even more in 2002, we would expect the local rate to rise above the national rate as in years past, but that has not happened. For the first eight months of this year, the local rate has averaged 5.8 percent. The national monthly average has risen to 5.9 percent. Despite the local history of deep reactions to national economic slowdowns, our recent experience is encouraging.

[FIGURE 1 OMITTED]

The local labor market has continued to reflect the diminishing presence of manufacturing. Through 2001, there were fewer jobs available in the county. Covered employment in the county fell to 45,173 by the end of 2001. There were still 64,023 residents of the county working in 2001. The disparity in the number of people working versus the number of jobs available is due to a number of factors, including the commuting patterns of workers (see Figure 2). Nearly 20 percent of the employed people who live in Madison County have jobs outside the county. Approximately half of the commuters travel to Marion County for employment. The employment losses we have experienced are clearly driven by manufacturing. For 2001, there were 1,200 fewer jobs in manufacturing in the county. This was one of the largest job losses for a one-year period over the past twenty years. The job losses can be attributed to the closure of Magnaquench and the ongoing attrition in the remaining automotive facilities (retirees are not being replaced at a 100 percent rate).

Income growth was modest through 2000 (the most recent year for which information is available). Per...