In 2020, the coronavirus pandemic plunged Northwest Indiana, (1) along with the state, nation and world, into what may be the most severe economic recession since the Great Depression. In April, the unemployment rate in Northwest Indiana spiked to 19.6%--or almost 60% higher than the highest recorded rate since at least 1990. (2) During the same month, the region lost almost 29,800 jobs, or 10.7% of its entire employment. While this was a devastating loss, it was less severe than employment losses nationally (-13.2%) and statewide (-12.0%) occurring at the same time.
Fortunately, the most severe effects on employment were short-term as consumers stayed home during the statewide stay-at-home order. By September, the region had recovered about two-thirds of the jobs lost and was only 4.1% below peak employment from March. In comparison, employment was still down 5.5% nationally and down 2.4% in Indiana. However, the full and longer-term economic effect of the crisis on Northwest Indiana's economy is still mostly unknown. Unfortunately, we will not have regional estimates of how income and economic output were affected until sometime in 2021.
As we reach the end of 2020, as much of the economic recovery that can happen without a long-term solution to the coronavirus pandemic has already happened. The economic recovery necessary to restore pre-pandemic levels of employment and income will likely take until well into 2022 or longer. How long this recovery takes will depend crucially on how quickly a long-term solution to the virus can be found, most likely in the form of an effective and widespread vaccine.
Despite the negative economic effects of the pandemic, Northwest Indiana experienced some significant developments in the last year and the region's economic future is bright.
Economic challenges and employment
One of the limitations early in an economic crisis is that it takes considerable time to get economic data at the regional level. The metrics we would commonly use, such as changes in personal income or economic output in 2020, will not be available at the regional level until 2021 at the earliest. The economic metrics we do have available at this point are mostly related to employment. However, given the nature of this crisis, and how its effects have been concentrated on workers and demand, these metrics are likely a better representation than usual of the broader economic effects.
Figure 1 shows the weekly combined (initial and continued) unemployment insurance claims in 2020 for Northwest Indiana, Indiana and the United States. (3) Since the pandemic began, Northwest Indiana has regularly had lower unemployment insurance claims per person each week than the state of Indiana and the United States. Since the week ending 3/21, Northwest Indiana has had 9.5% fewer cumulative weekly unemployment insurance claims per person than Indiana and 42% fewer than the United States. While regional weekly unemployment insurance claims are still well above pre-pandemic levels, at current trends they may return to normal levels by early or middle 2021, barring any additional economic shocks.
While weekly unemployment insurance...