South Bend and Elkhart area forecast 2009.

• Author: Black, Grant C.

November 2008

The Michiana region, comprised of the South Bend-Mishawaka (St. Joseph County) and Elkhart-Goshen (Elkhart County) areas, will rebound slowly in 2009 after facing a weakened economy in 2008. Recovery will depend on manufacturing conditions and the overall national economy.

Output

Real gross domestic product (GDP) for the region has increased. (1) Real GDP grew 0.1 percent in 2005-2006 in South Bend and 3 percent in Elkhart. In 2004-2005, South Bend's real GDP declined 2.3 percent, while Elkhart's expanded 2.7 percent. The size of the local economies in 2006 was $10.1 billion (chained 2001 dollars) in South Bend and $9.5 billion in Elkhart.

Employment

The region has faced weakening labor markets overall. Figure 1 shows metropolitan unemployment rates from 1990 to 2008. (2) Unemployment rates escalated rapidly in 2008, reaching their highest levels since the early 1990s. Due to substantial declines in employment in transportation equipment and related industries, Elkhart's unemployment rate surpassed South Bend's--reversing a long\time trend. Regional unemployment rates also grew worse relative to state and national averages.

Table 1 reports employment data by industry for the region's metropolitan areas. Approximately 268,100 people are employed in nonfarm sectors across the region, with employment being about 17,900 higher in South Bend compared to Elkhart. From September 2007 to September 2008, total nonfarm employment in South Bend and Elkhart decreased 3.2 percent with a loss of 3,500 jobs in South Bend and 5,300 jobs in Elkhart. That is substantially more than the approximately 0.1 percent decline the previous year--a condition then not seen since 2003 when employment fell from the year before.

[FIGURE 1 OMITTED]

Manufacturing employment fell by 4,700 jobs due to heavy layoffs and closings in transportation and related sectors. Heavily affected by plummeting RV production, Elkhart lost 3,800 manufacturing jobs. Manufacturing employment will likely remain uncertain in the year ahead as the RV and automotive markets remain sluggish and exports decline due to softening global demand.

Unlike the previous year, nonmanufacturing employment also saw sizeable employment losses from September 2007 to September 2008. No sectors experienced employment gains. Some sectors--including natural resources, mining, and construction and other services--remained stagnant, likely due to the sluggish national economy. The largest...