Columbus forecast 2009.

• Author: Smith, James C.

November 2008

Columbus and Bartholomew County have always depended on manufacturing for their economic health. Given that the nation's manufacturing sector typically contracts sharply in a recession, recessions have hit hard in Indiana and Bartholomew County. This time, however, we may dodge a bullet--or at least the biggest bullets.

The worst U.S. recession in recent memory took place in 1981-1982. In December 1982, the unemployment rate in Indiana reached 12.5 percent. The national rate peaked at 10.8 percent. Figure I shows the three-month moving average for unemployment rates.

Data on unemployment rates by county are not available for that period, but we know that thousands of local people lost their jobs. During 1982, Bartholomew County lost in excess of 2,700 jobs, more than 7 percent of its total employment. In relative terms, job losses the county were far worse than the national average. When employment numbers are indexed to 1980, the damage is obvious (see Figure 2). Indiana and Bartholomew County suffered much more than the nation in that recession.

During the recession of 1991-1992, however, Bartholomew County did not reprise its poor 1982 performance. The unemployment rate hit 7.8 percent nationwide, but topped out at about 6.3 percent in Indiana and 6.6 percent in Bartholomew County.

When the next recession took hold in 2001, it brought a big decline in durable goods sales. Employment in Indiana and Bartholomew County once again fell more steeply than in the nation as a whole. The actual rate of unemployment, however, was never much worse than the national average.

Our forecast for Columbus and Bartholomew County in the recession of 2008-2009 is not as gloomy as the forecast for the nation. Bartholomew County is better prepared than most areas to defend itself against the coming slowdown. There are at least three reasons for this.

[FIGURE 1 OMITTED]

[FIGURE 2 OMITTED]

1. Indiana in general did not experience the bubble in housing prices that occurred in other parts of the country. Now that the bubble has burst, we don't have as far to fall.

2. The economic activity in Columbus and Bartholomew County has become more diversified. In 1980, heading into that awful recession, 43 percent of the county's jobs were in manufacturing. Today that figure is about 28 percent. Over a period of many years, economic development leaders here have made wise and productive decisions.

   Indeed, during the 2001 recession, employment actually expanded...