Fort Wayne.

• Author: Guthrie, Thomas L.

After two years of decline (2000-2001) and a year of essentially no growth (2002), the Fort Wayne metropolitan area economy is forecast to have a significant cyclical bounce in 2003. The area economy consists of six counties: Adams, Allen, De Kalb, Huntington, Wells, and Whitley.

In reality, the area economy's malaise began in the summer of 1998 when manufacturing employment began a precipitous decline. Between then and the end of 2001, manufacturing employment decreased almost 13,000--or 16.8 percent (see Figure 1). The precipitous decline in manufacturing employment was not just an area phenomenon. Both Indiana and U.S. manufacturing employment declined approximately 11 percent (see Figure 1).

[FIGURE 1 OMITTED]

But the Fort Wayne area's greater percentage decline in manufacturing employment, combined with the fact that the area has a greater percentage of jobs in manufacturing, produced the almost 13,000 job loss.

Total payroll employment in the Fort Wayne area did not begin to decrease until March 2000, when the continuing decreases in manufacturing employment finally swamped the secular increases in services employment.

Area total payroll employment declined over 17,000 (6.2 percent) in twenty-five months. Starting in May 2000, payroll employment in Indiana declined 4.2 percent in twenty-five months. Starting in March 2001, U.S. payroll employment declined 1.3 percent in thirteen months.

In 2002, total payroll employment is not likely to change (from December to December). The decline in the first quarter will be offset by gains in the remaining three quarters. The U.S. recovery to date has been characterized as jobless (just as it was emerging from the 1990-91 recession). Ditto for the area recovery to date.

With respect to 2003, area payroll employment will increase between 2.0 and 2.5 percent (from December to December). That's equivalent to between 5,000 and 7,000 jobs. A principal rationale for the forecasted recovery is that because the recession was so severe locally, we will get a robust cyclical bounce.

A significant turnaround in business investment in plants and equipment during 2003 is another more fundamental reason. But to the extent that the turnaround probably will not occur before at least the second quarter of 2003, the forecasted job increase will be back-loaded.

Assuming it does occur, a robust cyclical recovery doesn't eliminate the secular problem the Fort Wayne area economy now faces. Through the last half of the...