The value of Northwest Indiana's economy (1) in the third quarter of 2017 was estimated at $29.99 billion, (2) or 1.6 percent larger than one year ago. Despite this growth, the economy of Northwest Indiana (NWI) expanded slower than the state of Indiana (3.6 percent growth) and the United States (4.1 percent growth). When adjusting for inflation, NWI's economic output fell by about $190 million in year-2015 dollars over the previous year.
A common measure of economic prosperity is real GDP per capita, or the average annual income/output per person adjusted for inflation. Using this measure, the average resident of Northwest Indiana saw their real annual income fall by $553 (-1.3 percent) during the last year. This decline is in contrast to a $396 increase for the average Hoosier and a $492 increase for the average American over the same period (see Table 1).
This lack of real growth in income for Northwest Indiana residents may be surprising considering that over the same period the unemployment rate for the region fell from 5.9 percent to 5.3 percent, and total employment remained stable. (3) This decrease in real income for Northwest Indiana is not being driven by lack of jobs, but rather an ongoing structural change in the type of jobs available, in addition to population changes.
Employment and population trends in Northwest Indiana
Looking at Figure 1, we can see the total change in employment for Northwest Indiana since 2012, separated into goods-producing and service-providing sectors. While total employment has remained essentially the same, the composition has changed significantly. Since the third quarter of 2012, Northwest Indiana has lost 6,200 jobs in goods-producing sectors, such as manufacturing and construction, which are generally high-paying (with an average income of $80,000 per year) and with good benefits. This decline was offset, at least in numbers,...