The trend noted frequently in this column continues, unabated. Indiana continues to outperform most of its neighbors, which is like being the smartest dummy in the classroom. Our record in the growth of our economy is at the level of cheerful mediocrity. And we are without leadership to see any improvement.
However, before we can move forward, we have to understand where we are. In 2005, Indiana ranked 15th among the states in the nation in Real private sector Gross Domestic Product (GDP). Real means we’ve taken inflation into account. Private sector means we’re leaving out government spending by the Feds, the States, and Localities.
By 2024, we sank to 18th place, behind leapfrogging Arizona, Colorado, and Tennessee. Why? Some will say all of those states have mountains. If only we had mountains, we too would have red hot private sector GDP growth. What can we do to grow mountains?
As is, our growth rate in the private sector, where we know all ingenuity and energy resides, was 38% over the intervening years, 27th in the nation. That was greater than the growth rates of all four of our contiguous states.
This period of time, 2005 to 2024, was one of unbalanced growth in America. Only 16 states and the District of Columbia increased their shares in private sector GDP. Indiana ranked 39th with Ohio, Michigan, and Illinois at the very bottom of the barrel. Just as Indiana went from 2% of the nation’s private sector GDP to 1.8%, that trio of neighbors went from 11.7% of the nation’s output to 9.5%.
We’ve heard much over the years of Indiana’s excellent competitive position in taxation, energy costs, constrained union activity, and a host of other factors important to business. Yet if you look back over the quarterly data from 2005 to the first half of this year, you’ll find we had declines in our private sector Real GDP 30% of the time while the U.S. suffered negative quarters in just 13% of those 81 quarters.
Must be those rankings by business magazines don’t take performance into account. If they did, they might notice that our share of the nation’s growth in private sector output was just 1.5%. Yes, despite starting with 2% of the output, we managed to produce only 1.5% of the added output of the nation. It is hardly a tribute to boldness, entrepreneurial achievement, and an outstanding work ethic.
Now we face a reconsideration and potential restructuring of the Indiana Economic Development Corporation (IEDC), as if they were to blame for our steady decline in national importance. What about the private sector where a few large firms dominate progress in our major urban areas? Could fewer new sports facilities and more attention to business be helpful?