A better recession for Indiana?

• Position: Indiana Indicators

Once upon a time the Indiana economy was more predictable. Or at least some of us thought so. Housing and autos were the engine of our economic existence. And since these two sectors led the plunge into, and the growth out of, every national recession, the Indiana economy could be faithfully depended upon to go into the tank earlier than the rest of the nation whenever times turned bad.

But this recession has been unusual. Although the downturn officially began last March, someone forgot to tell the housing industry. Residential construction has maintained a nearly 1.6 million unit pace of new starts since that time. Motor-vehicle sales have been propped up with a number of financial gimmicks that are bleeding Big Three automakers' wallets dry, but remain surprisingly strong given the state of the economy.

And yet the national economy has stumbled. A collapse in business spending and in exports, coupled with weak consumer spending, has helped produce the first recession in the U.S. economy since 1991. The question is, has the different nature of this 2001 recession changed the traditional relationship between downturns in the Indiana economy and the nation?

The data we need to fully answer this are not yet all in place, but at least for employment, we have enough to render a preliminary judgment. The arrival of the December job report on payroll employment in Indiana businesses finds the state with 51,200 fewer workers than it had at the close of 2000, a 1.7 percent decline. That's a little worse than the 0.8 percent decline suffered in national payrolls over the same period.

For the complete calendar year 2001, the aggregate story is pretty much the same. The U.S. economy actually managed a small 0.4 percent increase in employment over the entire year, while the Indiana economy suffered a 0.9 percent decrease in total non-farm payrolls. Without looking any further at the data, one would be tempted to say that this is because of our state's dependence on manufacturing, and particularly on durable-goods production, which usually feels the impact of spending downturns before other parts of the economy.

But even though the overall script is still being followed, it has some new wrinkles this time. Durable-goods manufacturing employment is down sharply, both in Indiana and in the nation. But with average annual declines of 5.5 and 4.4 percent, respectfully, the differences are not great. Moreover, Indiana's non-durable-goods employers performed...