Terre Haute.

• Author: Smith, James C.
• Position: Weak economic outlook for 2001 - Brief Article - Statistical Data Included

In the midst of the longest economic expansion in the nation's history, one Indiana metropolitan area is struggling to keep up with the prosperity gains. And its traditional weakness is expected to carry over into 2001.

Of the 11 metropolitan areas in Indiana, all have seen their total earnings from employment increase in recent years. Consider the five-year period ending in 1998, the latest year for which the U.S. Bureau of Economic Analysis has published local data. Indiana's statewide earnings grew 29% in current dollars. The Lafayette metro area and the greater Indianapolis area both beat that average, coming in at nearly 34%, and the Elkhart-Goshen area enjoyed a 32% rise.

In the Term Haute metropolitan area, however, which includes Vigo, Clay and Vermillion counties, current dollar earnings increased only 14%, the lowest metro area figure in the state. Second lowest was Muncie at 16.5%.

For a perspective on Term Haute's restrained capacity to generate income, we can examine the earnings per job figure calculated by BEA. This is simply total earnings from work divided by the number of people employed in the area. In the Term Haute metropolitan area, earnings per job in 1998 were $26,000, including both full-time and part-time employment. That's tied with Bloomington for lowest in the state.

Lafayette and Muncie, however, also had low earnings per job, so perhaps a large student population has an effect. If we look simply at earnings per person, dividing earnings by area population, the picture changes. The Term Haute metro area is clearly the lowest in the state at just over $14,000 per resident. Muncie and Lafayette earnings per population were $16,000 and $18,000 respectively. Assuming the earning power of students is similar at each of the four large universities, there apparently is something else that prevents Term Haute from matching the rest of the state's earning power.

We will leave examination of the details of Term Haute's earning power to another time. For purposes of a forecast for 2001, however, we can rely on this historical weakness to arrive at a likely economic scenario in the Term Haute metro area for this coming year.

The Term Haute area is likely to experience more problems as a result of the expected slowing of economic growth in the United States.

First, the unemployment rate in the Term Haute metro area will rise to higher levels than in most other parts of Indiana...