Indianapolis-Carmel forecast 2009.

• Author: Powell, Philip T.

November 2008

The following data and forecasts refer to the entire Indianapolis-Carmel metropolitan statistical area, 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. (1)

Income (2)

The Indianapolis economy entered into recession during the first quarter of 2008. Between the first quarters of 2007 and 2008, total wage income in the Indianapolis metro fell 0.3 percent in real terms. Real weekly wages for the average worker fell 1.3 percent. This compares with growth of 2.2 percent in total real wage income and 0.7 percent in the real weekly wage per worker between the first quarters of 2006 and 2007.

Matching a fall in real income was the fall from 39,037 to 38,957 Indianapolis business establishments from the first quarter of 2007 to the same quarter in 2008. Even during the last Indianapolis recession between 2001 and 2003, the number of establishments grew by 1,000. Many small businesses in Indianapolis face financial and market challenges that are historic in nature.

The curtailed spending of financially-stressed households was a major source of economic contraction between the first quarters of 2007 and 2008. Shrinkage in real wage income equal to 6.7 percent in retail, 5.9 percent in arts and entertainment, and 5.6 percent in real estate signaled dramatic retrenchment in expenditures by Indianapolis residents. Real wage income within organizations offering business management services declined 11.6 percent, suggesting no recessionary immunity for highly skilled workers.

Steady performance in three industries that offer Indianapolis a competitive advantage insulated the economy from further decline. Real income from manufacturing grew by 0.3 percent as local factories took advantage of a weak dollar to increase sales to foreign markets. Health care grew 3.9 percent as Indianapolis strengthened its position as a regional hub of medical services. Real income from transportation and warehousing remained level as higher oil prices motivated companies to outsource logistic and supply chain services to local providers.

Employment (3)

A rise in the unemployment rate from 3.7 percent to 5.1 percent between September 2007 and September 2008 is more evidence of a local recession. Over the same period, the number of unemployed residents in the metropolitan area increased 39.5 percent. A September 2008...