Indiana's outlook for 2011.

• Author: Conover, Jerry N.
• Position: Statistical data

One year ago, Indiana's economy was reeling from major hits caused by the deepest recession in decades. As 2010 draws to a close, we've seen measurable, if modest, improvement, and the prospects for the year ahead are mildly encouraging.

Employment: A Mixed Picture

The recession that began in December 2007 hit Hoosiers very hard. By the time Indiana employment bottomed out two years later, 227,900 payroll jobs had disappeared--the 13th highest rate of decline in the nation. Fortunately, 2010 has been a relatively good year: we've recovered 40,000 jobs between December 2009 and September 2010 (preliminary). This gain of 1.4 percent so far is the fifth fastest in the nation, and the state has received national media attention for its job creation. However, the pace of growth is unsteady, with some slippage in recent months. And despite this year's net gain, 82 percent of the lost jobs have yet to return.

Some sectors are faring better than others in this recovery. Figure 1 shows relative change in Indiana payroll employment since the start of the recession. Private education/ health services jobs actually increased nearly 4 percent, and government jobs have not slipped into negative territory.

[FIGURE 1 OMITTED]

In contrast, the construction and manufacturing sectors together shed more than 138,000 jobs, nearly one-fifth of their start-of-recession levels before they started slowly rebounding. Manufacturing has inched upward slowly, but construction remains near the bottom. And the professional and business services sector, which saw substantial job gains during the past decade, slipped 12 percent during the recession but has regained much of that loss this year.

We expect Indiana employment to complete 2010 about 2 percent, or 55,000 jobs, above where it started and for 2011 to show similar gains. This is well above job growth in recent years, but even so, at this rate it will be at least 2013 before employment returns to pre-recession levels. The forecast calls for all major sectors to show at least some growth in 2011.

Unemployment Stagnant

Indiana's unemployment rate has hovered around 10 percent since spring 2009 without any sign of meaningful abatement. Our state enjoyed about a 1 percentage point advantage over our neighbors from the summer of 2009 through late spring of 2010. However, all the neighboring states except Michigan have reduced their unemployment rates to match ours over the last several months.

The number of unemployed...