Gary forecast 2011.

• Author: Coffin, Donald A.

The Business Cycle Dating Committee of the National Bureau of: Economic Research has determined that the current recession began in December 2007 and that the recovery began in June 2009.(1) There is widespread agreement that this has been the worst recession the U.S. economy has experienced since World War II, and the dimensions of the decline are striking. Between December 2007 and June 2009, employment in the United States declined by 5.3 percent, with a net loss of about 7.3 million jobs, and the unemployment rate rose from 5.0 percent to 9.5 percent.(2) U.S. gross domestic product (GDP) declined during this period (fourth quarter 2007 to second quarter 2009) by 4.1 percent (using chained dollars).

In northwest Indiana, employment fell 7.2 percent, a net loss of 20,800 jobs, as the unemployment rate rose from 4.6 percent to 10.6 percent. GDP data are not readily available for the local economy, but total wages paid to employees in the broader northwest Indiana region fell by 15.2 percent between the fourth quarter of 2007 and the second quarter of 2009.3 It is clear that the recession hit northwest Indiana harder than it hit the nation.

Since the recovery began in June 2009, employment nationally has actually declined slightly (-0.25 percent), while the unemployment rate has increased to 9.6 percent (from 9.5 percent). Nationally, GDP has increased by 3 percent (through the second quarter of 2010). Growth in GDP during the early stages of this recovery has been disappointing, but is comparable to growth coming out of the 1991 and 2001 recessions.

Local employment in northwest Indiana has actually grown in recent months, rising by 1.3 percent between July 2009 and September 2010; as with the nation, however, this has not led to a decline in the unemployment rate, which is essentially unchanged (10.6 percent compared to 10.5 percent). Total wages in the first quarter of 2010 (the most recent data available) for the broader northwest Indiana region have continued to decline, down by 2.8 percent since the second quarter of 2009.

The last three years have been perhaps the most difficult period the U.S. economy has encountered since World War II, so the question is, "what we can expect going forward?"

The baseline sub-state forecasts from the Center for Econometric Model Research forecasts employment growth in northwest Indiana of about 1.3 percent for 2011, 1.7 percent for 2012, and 1.5 percent for 2013. If this occurs, it will match the...