Gary forecast 2017.

AuthorPollak, Micah R.

The value of Northwest Indiana's economy in 2016 was $29.4 billion, measured using imputed gross metropolitan product (GMP). (1) This makes Northwest Indiana's economy equivalent in size to 4.6 percent of the Chicago metropolitan area's economy, or 8.6 percent of Indiana's economy. (2)

Despite its relative large size, Northwest Indiana's economic growth has been anemic. During 2016, the growth in real GMP for Northwest Indiana was just 0.1 percent (compared to 0.4 percent for the state and 1.4 percent nationally). Even more concerning, real GMP per capita for Northwest Indiana decreased 0.3 percent in 2016 to $41,616 per person (compared to a 0.2 percent increase to $51,521 for the state and a 0.6 percent increase to $57,131 nationally).

Figure 1 provides a visual comparison of real GDP/GMP for the United States, the state of Indiana and Northwest Indiana since 2009. Since the low point of the Great Recession in 2009, real GMP per capita for Northwest Indiana has risen only 0.1 percent per year on average (+$35/year), compared to 1.2 percent (+$647/year) nationally and 1.9 percent (+$898/year) for the state. This lack of significant real growth can also be seen in real personal income, real earnings per worker and other measures. This suggests that, for the average worker, the region's economy has recovered very little since the Great Recession.

This lack of economic growth is perhaps surprising given that other measures of the regional economy have improved significantly. The unemployment rate for the seven-county Northwest Indiana region (which includes Lake, Jasper, LaPorte, Newton, Porter, Pulaski and Starke counties) dropped to 5.6 percent from its 12.4 percent peak during the Great Recession. Total employment for Northwest Indiana was 395,970 in July 2016, which is higher than before the Great Recession and higher than any time in the last 25 years. (3) Even the production of steel in Indiana, the traditional lifeblood of the region, has returned to its pre-recession average. (4)

Despite these improvements, the average annual income per person in Northwest Indiana has not risen significantly since the end of the Great Recession. To understand why the effects of the recovery have been so limited for workers, we have to look at ongoing changes to the labor market and the types of jobs being created in the region.

When you look closer at employment in Northwest Indiana, two significant trends stand out. The first is that our economy is...

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