Indiana is different: measuring economic activity in the United States and Indiana.

• Author: Marcus, Morton J.

The two most common measures of economic activity are output and income.

The first is most familiar to us--Gross Domestic Product (GDP). This is the number reported at least three times for each quarter of the year by the media. It measures the value of goods and services produced in the United States in a given time period. This number is available for the nation quarterly and annually and for states and metropolitan areas annually (see Table 1).

The second way of assessing economic activity is through personal income. This number is reported monthly, quarterly, and annually for the nation; it is available quarterly and annually for states and metro areas, and annually only for counties. Personal income is the sum of wages, salaries, bonuses, employer paid benefits, Social Security, unemployment compensation, dividends, interest, rent, and other payments to individuals. It excludes capital gains and withdrawals from personal savings (retirement accounts) that are important to determining the spending capability of the population.

Personal income is considered one of the premier measures of economic well-being. But personal income depends primarily on the value of output (GDP). Both measures are developed and distributed by the U.S. Bureau of Economic Analysis. Here we will examine GDP for states and the nation.

Indiana in the National Perspective

In 1997, Indiana contributed 2.1 percent of the nation's GDP and ranked as the fifteenth largest economy among the fifty states. By 2006, Indiana's share of U.S. GDP fell to 1.9 percent--making the Hoosier state the sixteenth largest economy. This seemingly small decline of -0.2 percentage points was the ninth highest loss of GDP share in the nation.

During this period, Indiana's GDP (adjusted for inflation) grew by 21.6 percent (thirty-eighth in the nation) compared to the U.S. rate of 31 percent. Arizona led the nation at 61.8 percent and Alaska trailed all states at 4.2 percent (see Figure 1).

Of twenty-one sectors, Indiana's largest was durable goods manufacturing in both 1997 and 2006. In 1997, this sector represented 18.1 percent of the state's total GDP; this was the highest level recorded in the nation. By 2006, durable goods remained the largest portion of Indiana's GDP at 20.5 percent, but three states had higher dependence on durable goods than Indiana (Oregon, Idaho, and New Mexico).

As seen in Figure 2, Indiana's second largest sector in 2006 was nondurable goods manufacturing at 10...