News From Terre Haute, Indiana

March 10, 2013

GDP is the DNA of national MSA economies

Morton Marcus
Special to the Tribune-Star

TERRE HAUTE — The nation’s 366 metropolitan statistical areas (MSAs) accounted for 89 percent of the $13.3 trillion United States Gross Domestic Product (GDP) in 2011.

 After the polluted language we’ve heard from legislators in Washington and Indianapolis, doesn’t that sentence give you a nice, clean feeling?

It’s a fact, not a self-serving political statement. As relief from the axis of irrelevancy that runs through Washington and Indianapolis, let’s enjoy some facts for a change.

GDP measures the market value of goods and services produced. It is not a measure of income, but of output.

Metro areas are imperfect statistical entities. For example, Lake, Porter, Newton and Jasper counties in Indiana are subsumed under the Chicago MSA. Indiana counties in southern and southeastern parts of the state are lumped in with Louisville and Cincinnati. Nonetheless, we have some interesting data to work with.

2011 was the year when the nation’s 366 metro areas together exceeded their previous GDP high point in 2007. That fact hides the truth. As ever, the aggregate disguises the detail.

Only 164 of the MSAs had higher GDP values in 2011 than they did in 2007. Over 55 percent of metro areas were still below their 2007 peaks in 2011.

Among those which had cleared the recession were Columbus, Lafayette and Bloomington MSAs.

The remaining 13 MSAs that include Indiana counties were still in recession in 2011.

Kokomo and Elkhart-Goshen still had production valued below 2007 levels and ranked at the very bottom of all MSAs in the U.S. for recovery.

However, to quote the U.S. Bureau of Economic Analysis, “Kokomo, IN and Columbus, IN were two of the fastest growing metropolitan areas in 2011, with overall real GDP growth of 7.1 percent and 7.8 percent, respectively.”

What is going on here? Columbus had the best record of growth in the state from 2007 to 2011 and also from 2010 to 2011. Kokomo had the second-best rate of growth from 2010 to 2011, but still trailed all MSAs in growth from 2007 to 2011 because of the particularly hard hit it took in the recession of 2008 and 2009.

Recently there is good news out of the Kokomo MSA with announcements from Chrysler of new facilities and employment opportunities. When the data for 2012 and subsequent years are released, Kokomo may well be among the national leaders in growth again.

Indiana is not a homogeneous state. Politicians and economists are on shaky ground making broad generalizations about our economic conditions. Individual large companies have major effects in selected communities. One firm going through a crisis can throw off the data for an entire metro area.    

Our metro areas do not all change in the same way at the same time. Yes, manufacturing continues to be a common element of most local Hoosier economies. Nevertheless, careful analysis finds important county or regional differences that should make analysts more cautious and elected officials less dogmatic about economic affairs.



Morton Marcus is an independent economist, writer and speaker. Contact him at mortonjmarcus@yahoo.com.