Is Indiana's economy still getting worse?

• Author: Barkey, Patrick M.
• Position: Indiana Indicators - State legislature works on budget

One of the most memorable scenes in the classic movie "The Wizard of Oz" has Dorothy's little dog Toto pulling back the curtain in the corner of the wizard's huge hall to reveal the mild-mannered person pulling the levers that make the fearsome image of the wizard come alive. "Pay no attention to the man behind the curtain," the booming vision commands, but the little dog has put to the lie the entire apparatus that gives the wizard his power.

In the real-life story of the Indiana economy of 2003, the booming pronouncements are coming from our state legislature, in the form of a budget the essentially tells us that we can keep the state ship afloat by cutting a few corners. But what is really at the controls in the situation is our state's economy, which doesn't appear to be on the same page. Until and unless the state's economic indicators shape up and start moving in the right direction, those hopeful pronouncements will ring hollow in the months ahead.

After treading water during most of last winter, Indiana's seasonally adjusted job total has slipped since January. The preliminary April employment totals, as adjusted for seasonal variation by the Bureau of Business Research, were down by 39,000 jobs statewide from their high point at the beginning of this year. At 2,862,000 workers in April, that puts state payrolls down by about 1 percent over the most recent 12 months, and down by an unofficial 153,000 jobs since the state's pre-recession high-water mark of January 2000.

Making an assessment or prediction from the preliminary data on state employment is a risky business. But the direction and magnitude of Indiana's most recent figures are consistent with the lethargic performance of the national job market in recent months.

According to the employment data, some sectors of the state economy, as well as some individual cities, are feeling more pain than others. Construction payrolls were sharply lower throughout the state in April, compared to the same month one year earlier, falling by an average of 6.2 percent statewide. The sole exception was the New Albany MSA, where new homebuilding has continued to rise.

Much of the blame for the weakness in the state's overall job growth can be laid at the feet of the Indianapolis MSA, the state's largest. Not only has homebuilding and other construction activity tapered off, but the nine-county area's much larger professional- and business-services sector has taken an...