Indianapolis-Carmel.

• Author: Powell, Philip T.

The following data and forecasts refer to the entire Indianapolis-Carmel Metropolitan Statistical Area (MSA), which includes Boone, Brown, Hamilton, Hancock, Hendricks, Johnson, Marion, Morgan, Putnam, and Shelby counties. Unless otherwise noted, data comes from STATS Indiana at www.stats.indiana.edu.

Income

Between the first quarters of 2006 and 2007, income growth slowed significantly. Annual growth in real average weekly compensation in the Indianapolis-Carmel metro area decelerated from 5.1 percent to 0.8 percent. The average manufacturing worker saw take-home wages shrink 0.7 percent in real terms. Overall, compensation data suggest a 2.2 percent real growth rate in the local economy. This is down from 6.6 percent over the same period last year and lags the 3 percent growth in real gross domestic product (GDP) posted by the U.S. economy as a whole. (1)

Previously established momentum in the Indianapolis region's income growth disappeared between 2006 and 2007. The city has returned to its traditional status of a lagging economic performer. The city lacks the critical mass of a high income industry required to make it competitive with other metropolitan areas across the nation.

Employment

Last year, employment in the Indianapolis-Carmel MSA shrank at an unprecedented rate. Between September 2006 and September 2007, total employment fell by 1.1 percent, as measured by the U.S. Bureau of Labor Statistics. This is a dramatic reversal of the 2.4 percent annual growth rate witnessed between September 2004 and September 2006. Indianapolis-Carmel metro employment has fallen only one other time since 1990. Jobs fell by 0.7 percent between September 1990 and September 1991 during the First Gulf War recession. Employment contraction in Indiana outpaced the Indianapolis region with a -1.6 percent rate between 2006 and 2007. Over the same period, employment nationwide grew by 1 percent. Construction, manufacturing, real estate, retail trade, and entertainment are industries that account for most of the employment contraction in the Indianapolis-Carmel MSA.

Ironically, local unemployment fell from 4.1 percent to 3.7 percent while the national rate increased from 4.4 percent to 4.5 percent. The unemployment rate fell even though the number of jobs shrank because of even larger shrinkage in the labor force. The labor force is the number of people of working age that have a job or seek a job. This number shrank by 1.5 percent between 2006 and 2007--a...