This week’s column is a brief, statistical description of the Indiana economy’s changes over the past quarter century. Our descriptor is Gross Domestic Product (GDP), the current market value of goods and services produced in this state by the businesses, organizations and governments located here.

By and large it is also a statement of the market activity of Hoosiers, recognizing that many people travel to and from other states where the work or live. Not included are the non-market activities like housework and getting dressed. We all participate in these activities which are of value to ourselves and others.

In 1998, Indiana accounted for 2% of the nation’s GDP; by 2023, this figure was down to 1.8%. Over those years, the nation averaged 4.6% GDP growth while Indiana managed 4% annually.

(Readers, please excuse the apparently small percentage differences; they can be of great significance. For example, if Indiana matched that 4.6% national growth rate, our 2023 GDP would have been $67.4 million greater or 13.5% higher than what we actually achieved.)

Our best performing industry of any consequence was Farming which went from 0.4% of the nation’s farm GDP to 1.4%, growing by 3% compared to a national decline of 2%. But with farming, individual years often reflect nothing more international production differences, whatever the cause.

There were impressive gains in Motor vehicles, bodies, trailers and parts where we advanced from 1.9% of the nation’s output to 3.4%, outpacing the nation with our 6.5% growth to the U.S. 4.2% increase. Indiana went from 7.9% of the industry’s output to 12.9%.

But, although we outperformed the nation, the industry itself was in decline relative to the full economy, going from 1.4% to 0.6% of total GDP. RVs were hot, but not compared to the diverse Professional and business services and Finance, insurance and real estate sectors, that together advanced from 29% of GDP in 1998 to 34% in 2023.

The hardest hit general category nationally was Manufacturing, which went from 15.8% to 10.2% of GDP and from 30.8% in Indiana to 25.9%. Yes, we outperformed the nation in growth (3.3% vs 2.8%), but advancing in a relatively declining industry is not necessarily worthy of commendation.

The national policy of restoring Manufacturing to its prior position of international dominance appeals to Hoosier politicians, but may be betting on the wrong horses. Our prior glory was probably a benefit of the Civil War and railroad development north of the Ohio River. Being the Crossroads of America may not be of future consequence, except at this moment for Warehousing and storage.
Morton J. Marcus is an economist formerly with the Kelley School of Business at Indiana University. His column appears in Indiana newspapers, and his views can be followed his podcast.

© 2025 Morton J. Marcus

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