Anderson and Muncie.

• Author: Barkey, Patrick M.
• Position: Economic conditions

Forecasting is an exercise fraught with risk, and that risk doubles with forecasting the performance of small-sized urban economies. Not only are the data that we use to assess and project the future for smaller metro areas of uncertain quality, the comparatively small geographies involved also make it possible for one or two unforeseen events to undo even the best efforts at prediction.

But the businesses, governments, and families in Anderson and Muncie are nonetheless more concerned than most about the future of their economies. Since the mid-1990s, both of these communities--as well as neighboring Kokomo and Richmond--have seen stagnation and decline, as transition in the manufacturing economy continues to erode their economic base.

The past year (2006) saw several dramatic announcements of new investment and significant projected employment gains for both Anderson and Muncie. Unfortunately, those announcements were offset by negative developments in several established manufacturing companies. The upshot is that the slow declines in employment that have occurred during most of the last decade are likely to continue in 2007.

Anderson

The Anderson metro (Madison County) was reborn after the 2000 Census, after spending a decade as part of the Indianapolis (now Indianapolis-Carmel) metro area. That means that very current estimates of employment by major industry are available from the Current Employment Survey (CES), the same source for state and national level payroll employment estimates. Those data portray the Anderson economy as having stabilized in 2006 from the job declines suffered in previous years.

In the first three quarters of 2006, employment averaged about 100 jobs, or 0.2 percent, higher than the same period in 2005. That stability was largely due to a 300-job increase officially estimated for Madison County manufacturing employers. This 4.7 percent growth in factory jobs, if it survives the coming revisions, would eclipse the manufacturing job growth of every other metro area in Indiana over the same period.

Unfortunately, the CES employment estimates are almost certainly too high. A comparison of recent quarterly growth to the UI-based Quarterly Census of Employment and Wages employment estimates, shown in Figure 1, reveals a considerable disagreement between the two growth estimates since the midpoint of last year. The QCEW data, available only through March 2006 at the time of this writing, will form the basis for...