Indiana.

• Author: Marcus, Morton J.
• Position: Economy 1990-2000 - Brief Article - Statistical Data Included

The last recession ended, and the current expansion began, in the second quarter of 1991. Since then the U.S. and Indiana economies have been expanding. In constant (1996) dollars, Indiana's economy has grown by $39 billion, an average rate of 3.3 percent per year (see Figure 1).

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As this remarkably long expansion has continued, two distinct periods can be identified. In the first period (1992 2nd quarter to 1994 1st quarter), Indiana advanced more rapidly than the nation. In the second period (1994 1st quarter to 2000 2nd quarter), the Hoosier state trailed the nation in growth of personal income. Figure 2 shows the difference between Indiana's growth rates and those of the nation. In 18 of 37 quarters Indiana grew more rapidly than did the nation. But notice that nine of those positive quarters came in the first 12 quarters under consideration. In the last 25 quarters, Indiana also had nine quarters with faster growth than the nation. Hence the frequency of positive differentials has been cut in half. Also notice that the highs were higher in the early years and the lows lower in the later years.

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The result of these differential growth rates was a dramatic rise in Indiana's share of U.S. personal income in the early period, with an equally dramatic fall in that share since 1994 1st quarter (see Figure 3). In historical perspective, the rising period was an anomaly, interrupting a fairly steady decline that began in the late 1970s.

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Figure 4 summarizes the two periods very clearly. As the U.S. picked up steam in the last six years from a slow start in the first four years of the decade, Indiana slowed down. Where the nation's growth rate accelerated from an average of 2.1 percent to a robust 4 percent, Indiana slipped from a respectable 3.6 percent to a still honorable 3.2 percent average annual growth rate for personal income.

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A Regional View

Indiana was not alone in this swing of fortune. As Figure 5 shows, Indiana was one of 14 states that had a deceleration in growth between the two periods. California, with approximately 13 percent of U.S. personal income, had the greatest acceleration at 4.69 percent (from 0.05 percent to 4.74 percent). The Golden State moved from slowest growing state in the nation to the 11th fastest growing state in this transition. At the same time, New York, New Jersey, and Massachusetts...