South Bend and Elkhart area forecast 2013.

• Author: Agbetsiafa, Douglas

The Michiana regional economy, which includes the South Bend-Mishawaka Metropolitan Statistical Area (MSA) and the Elkhart-Goshen MSA, continues its recovery from the setbacks from the 2007-2009 recession. We expect the region's economic growth to continue well into 2013.

Metropolitan Gross Domestic Product

From its combined real gross domestic product (RGDP) of $19.45 billion (in chained 2001 dollars) in 2010, the region's economy expanded thanks to the strong recovery in the Elkhart MSA's durable goods-producing manufacturing sector. After declining 15.3 percent in 2009, its growth continues to improve--reaching 13 percent growth in 2010 and later.

The South Bend-Mishawaka metropolitan area's RGDP grew 1.0 percent in 2010 after declining 6.9 percent in 2009, according to Bureau of Economic Analysis data. Overall, the size of the local metropolitan economies, while higher in 2012 than in 2009, has remained below pre-recession levels.

Labor Force and Employment

The decline in the labor force of the local economy has abated. The combined labor force of the two metros fell by 836 workers between September 2011 and September 2012, compared to a decline of 1,494 workers between September 2010 and September 2011. This improvement is unevenly distributed between the two metropolitan areas. From September 2011 to September 2012, the South Bend-Mishawaka MSA labor force declined by 2 percent (2,711 workers), while the Elkhart-Goshen MSA labor force added 2 percent (1,875 workers).

Combined employment for both metros rose by 8,800 from 243,800 jobs in September 2011 to 252,600 in September 2012. The Elkhart-Goshen MSA added 8,600 of those jobs, while the South Bend-Mishawaka MSA added the other 200 jobs. During the same period, the number of unemployed dropped 25 percent (2,581) in the Elkhart-Goshen area, and 18 percent (2,703) in the South Bend-Mishawaka MSA.

As a result, the unemployment rate fell sharply in both MSAs between September 2011 and September 2012-3 full percentage points in Elkhart-Goshen and 1.6 percentage points in South Bend-Mishawaka. Figure 1 presents monthly unemployment rates from 1990 to 2012. These rates were lower by the third quarter of 2012 than they were in 2009 and 2010.

[FIGURE 1 OMITTED]

The recovery that began in June 2009 spurred economic growth, a reduction in the number of unemployed and a decline in unemployment rates across the two metro areas. By the third quarter of 2012, the Elkhart-Goshen MSA saw its...