It seems frivolous to compare our county economies to amusement park rides. But that is how I’ve understood it since I took my boys to Kings Island many years ago.
They rode The Beast; I got sick just thinking about the Carousel and its prancing horses.
Our county economies are not designed with the precision of roller coasters, but they do have dramatic rises and falls without the safety provisions available at Kings Island and elsewhere. Most attention is paid to changes in the magnitude of the economy, as measured by Gross Domestic Product (GDP), the value of what we produce in market goods and services.
That GDP figure is usually translated into Real values, that is, adjusted for inflation. Between 2004 and 2024, about the span between birth and a real job, the simplest measure has Indiana’s economy growing by 1.53% annually.
That’s the smooth rate of growth going from 2004 to 2024, without regard for what’s in-between. But if we follow the ups and the downs of the economy, our state growth rate averaged 1.58%.
Not much of a difference? Right, but it is of consequence when we get to the county level.
Only 79 or our 92 counties actually grew in Real GDP between in those 20 years. These were led by four Indianapolis suburban counties (Boone, Hamilton, Hendricks and Hancock) and Whitely County in the Fort Wayne area.
Benton County, with its significant wind farms, is also included. The average growth rate for each was over 3.6% per year, double the state’s rate.
In 13 counties, the actual size of the economy shrank. There was an annual decrease in Real GDP that averaged more than 2% in Fayette, Pike, and Ohio counties. But were relief services sent to those 13 counties?
A shrinking economy is a disaster area. Housing values fall as population leaves or can’t afford upkeep. Schools and other public services must carry on with shrinking budgets. Decline might be caused by natural events (tornados or floods), but when it is the result of private business decisions or government policies, the pain is equally severe.
This average growth rate is always greater than the smoothed rate between the start and the finish because no economy with without its ups and downs. For the state, the average of those annual ups and downs was a mere 0.11%
When looked at closely, it turns out 30 of our 92 counties had a pattern of negative growth rates between subsequent years. If they went up 3% one year, they were at a lower rate the next year. Sustaining growth is difficult.
Bouncing between strong growth one year and weak growth or actual decline the next, makes planning and living difficult for households, businesses and local governments.
You can say, “Oh, that’s the way of the world.” But maybe it’s time to look at that volatility more closely and its effects on the lives of our people.
Morton Marcus is an economist. Reach him via email at mortonjmarcus@gmail.com.
This article originally appeared on Evansville Courier & Press: Marcus: Riding the roller coaster of local economies | Opinion
Reporting by Morton Marcus, Columnist / Evansville Courier & Press
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