Gary forecast 2014.

• Author: Pollak, Micah R.

The economic changes in Northwest Indiana in 2013 have been mixed. While some areas of the economy have rebounded and even exceeded pre-recession levels, such as the health care industry, others still lag far behind, such as manufacturing. For the purpose of discussing the regional economy, the "Gary metro area" of Northwest Indiana is defined by the U.S. Census Bureau as the following counties: Lake, Porter, Jasper and Newton (La Porte County is now the Michigan City metro).

When discussing the economic conditions of this area, one particularly useful tool is the Northwest Indiana Coincident Index which is published monthly by the School of Business and Economics at Indiana University Northwest. (1) This index measures the current pulse of the economy and forecasts the future growth of the region. The Coincident Index is modeled after state and federal coincident indices published by the Federal Reserve Bank of Philadelphia. (2)

Based on the Northwest Indiana Coincident Index, the economy in Northwest Indiana grew 1.6 percent between August 2012 and August 2013. Figure 1 shows the Northwest Indiana Coincident Index since 2008. In August 2013, the index rose to a new high of 136.4. While this is favorable news, this growth is less than the 2 percent growth that was forecasted one year ago by the index. Furthermore, Northwest Indiana grew at a slower pace than both the state of Indiana and the nation during this same time period. The coincident indices published by Federal Reserve Bank of Philadelphia show the state of Indiana grew by 3.3 percent and the United States grew by 2.9 percent.

The slower economic growth in Northwest Indiana can primarily be attributed to the types of jobs in the region, particularly the high concentration of employment in manufacturing. Figure 2 shows the top five industries by earnings in the Gary metro area. These industries are manufacturing, health care, government, construction and retail trade. More than 25 percent of earnings in Northwest Indiana come from manufacturing jobs. This high concentration of earnings and employment in a single industry means it is harder for the region to adapt to changing economic conditions as all our eggs, so to speak, are in one basket.

FIGURE 2: Top Five Industries by Earnings in the Gary Metro Area, 2011 Other Industries 23% Manufacturing 25% Retail Trade 8% Construction 13% Government 15% Health Care 16% Source: Bureau of Labor Statistics, Current Employment Statistics...