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Tuesday, December 7, 2021
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Thursday, December 5, 2019 2:55 PM

How’s business? “Wonderful,” is the answer you’ll probably get from those who only know the stock market continues to rise. 

How is business in Indiana or in your sector of the economy? That answer is often hard to find. 

  • INDIANAPOLIS – Normally, I wait until mid-December. This year, to celebrate the 30th anniversary of this weekly homily, I went early for my annual visit with Elvin Elfenhausen at the North Pole. As we downed rounds of Santa Sauce from our tankards in the Polar Pub, we talked about forecasting. “We do lots of forecasting here at Santa’s Workshop,” Elvin told me. “What do you need to forecast?” I asked. “The weather for the sleigh’s delivery route? Which houses have which children? They do move around, but is that necessary?” “All that and more,” he told me. “In addition to knowing the weather and the location of each child, so we don’t deliver the same presents as the year before, we have to identify toy trends and the economic conditions of each household.”
               
  • INDIANAPOLIS – In the small forest behind our house, the leaves are falling in showers of color. They return to the earth the nutrients taken from the earth. It is one of the great cycles of nature. Those who ascribe a consciousness to trees might say the trees are thanking the ground from which they grew. Others would claim the trees are acting in their own self-interest, assembling a form of savings for their own future betterment. This is also the season for organizations with all sorts of meaningful causes to solicit donations. The basic concept is parallel to the trees and the leaves. Our status in life, to some degree, is due to the conditions in which we have been placed or we have chosen.
  • INDIANAPOLIS – In September 2021, the Consumer Price Index (CPI) rose by 5.4% above the level of prices in the same month a year earlier. The media declared an economic avalanche. That September figure was indicative of what’s been going on since the COVID virus receded from the fear centers of many brains. The September 2021 figure was abnormally high; not once in the preceding 10 years had the September index exceeded 2.3% on a year-over-year basis. Such a high figure does not mean the prices of what you buy went up by 5.4% or will go up by that amount in the near future. Likewise, the prices of individual CPI components may be rising or falling; they do not move in lockstep. Take a trip with me to the grocery. Good bread (not that paste substitute for real bread) increased in price by 2.8%. The peanut butter we’ll buy carries a price 6.2% above the year earlier figure. But both the bread and the spread saw increases that were 2% lower than the increases of 2020.   
  • INDIANAPOLIS –  You probably noticed the Earth, including Indiana, is experiencing climate change. Warmer temperatures, earlier Springs, shorter Winters, historic storms are nothing new, but they impose expensive stress on households, businesses, and governments. Builders, developers, insurers, regulators, financiers are reassessing the risks they face, the opportunities they have. Those reassessments are developing in progressive states like California and Connecticut as well as in troubled Florida and Texas. What’s being done in Indiana? Are building codes being changed in your community? What needs to be done by farmers, small business owners, schools, utilities, cities and homeowners? Will your friendly roofer guarantee a lower insurance cost because of the products and methods used on your home?
            
  • INDIANAPOLIS –  Somehow we learned that Caesar wrote “Gaul is divided into three parts.” So too the United States is divided by the federal Office of Management and Budget (OMB) into three classes of counties. Those counties with a city of 50,000 or more persons, or a strong commuting relationship to such a county, are in Metropolitan Statistical Areas (Metros). Secondarily, OMB created Micropolitan Statistical Areas (Micros), counties with cities of 10,000 or more inhabitants. Third, if with a population smaller than a Micro, and without a significant commuting relationship with a Micro or Metro, then you don’t get a special name. However, I’ll label you as a Rural county. Metro areas dominate the nation with 86% of the population.
  • INDIANAPOLIS – My neighbor, Phil Pillpusher, was raking leaves when I stopped. “Congratulations,” I said. “Just heard about the new miracle drug on the news,” “Yeah, blockbuster,” he smiled. “Going to be big once OxyBoZo is in the heads of doctors and their patients.” “That’s where your job comes in,” I smiled. “Get those ads on TV telling folks to ‘Ask your doctor about OxyBoZo’ and the cash rolls in.” “It’s a great example of how research keeps Big Pharma getting bigger,” Phil beamed. “Our social scientists found that 96.3% of all men have been identified by their loved ones as Bozos at some point in their lives. Then 92.8% of those 96.3% want to be free of that bozo identity, safe from Bozoitis.” “So this will be a popular drug for a social discomfort, not a real physical or emotional malady?” I said. “Exactly,” Phil confirmed. “It’s just the kind of product that could be kept from the market if Congress allows Medicare to negotiate prices for pharmaceutical products.”
  • INDIANAPOLIS – Rep. Tim Brown (R-Crawfordsville) chairs the Indiana House Ways and Means Committee, the source for tax and budget bills. He entered the House in 1994, was appointed as chair of the committee in 2012, and is about to retire. I don’t think we’ve ever met, and I have no bone to pick with him personally. But I wonder, do we live in the same state? Rep. Brown was interviewed by Emily Ketterer of the Indianapolis Business Journal (IBJ 10/01/21 p.4A). Her question, among others, “What were some of your biggest accomplishments since you took office?” Rep. Brown: “Over 28 years? I mean, the biggest thing is seeing the change in Indiana. Yeah. I mean, we were in the bottom third of lower economic growth, and now we’re in the top 10. So, to see that change in Indiana has been huge.” This is an interesting response. Rep. Brown does not celebrate his own contributions to the state, but to the economic condition of the state during his tenure. I do wonder, however, if he and I live in the same state. Typically, Gross Domestic Product (GDP) at the state level is used to measure the overall output of an economy. During Rep. Brown’s 28 years in the Legislature, Indiana’s GDP grew at a compound annual rate of 3.16% compared to 3.45% for the nation. Indiana ranked 28th among the 50 states.
  • INDIANAPOLIS –  Arthur Ampersand, associate assistant deputy director at the state’s economic development bureau (EDB), announced Indiana is winning the civil war for good jobs. “If that’s the case,” I said, “our average compensation must be going up.” “Yes,” he declared. “Indiana’s average compensation per job has increased by $7,180 (13.3%) over the five years from 2014 to 2019. And that’s higher the 8% rate of inflation in that period. “Is that impressive?” I asked. “Oh, impressive indeed,” he bellowed. “We added more dollars to compensation per job than 18 other states. Our percentage growth was better than 23 other states.” “That means,” I said, “we weren’t in the top half of all states. Hoosier workers were almost $2,000 (22%) short of the national increase in compensation per job. But why,” I asked, “didn’t you use 2020 figures?”
  • INDIANAPOLIS –  With 1,451 Hoosier COVID deaths in the past 90 days, with the General Assembly making redistricting a private party, the deadline for READI proposals goes unnoticed. You remember READI (the Regional Economic Acceleration and Development Initiative)? Dreamed up by the governor and the legislature, READI was handed to the IEDC (the Indiana Economic Development Corporation) to administer “a bold, transformational initiative that will dedicate $500 million in state appropriations to promote strategic investments that will make Indiana a magnet for talent and economic growth.” The resulting sub-state regions were certainly a bold, if not an immaculate conception. Of the 20 or so regions posted on an IEDC map, some were familiar county alignments and others were…odd. Batesville (spanning the border of Franklin and Ripley counties) is a region. Pike and Gibson counties appear to have been orphans to be shared somehow by three adjacent regions. The Indianapolis metro area is split into four regional groups with Hancock County apparently going it alone.
  • INDIANAPOLIS – Last week we breezed through the migration of people into Indiana between 2015 and 2019. This week we speed up the process and look at the outmigration from Indiana with the resulting net- and gross-migration figures. Illinois gave us the largest number of in-migrants, 31,900 between 2015 and 2019. Illinois also took the largest number of our out-migrants, 15,400. These flows (in’s minus out’s) gave us a net in-migration from Illinois of 16,500. That positive net inflow from Illinois alone accounted for 47% of Indiana’s population growth from migration. Excluding Illinois, 22 states plus Puerto Rico had positive net inflows to Indiana of 8,700. The leaders were New Jersey (1,700) and California (1,100). Similarly, net outflows from Indiana totaled 16,400 to 26 states and D.C. The leaders were Florida (4,200), Texas (2,000), Tennessee (1,500), Michigan (1,400), and Arizona (1,100).
  • INDIANAPOLIS – Where are all these new people coming from? Throughout Indiana, folks are asking this question. Now we have answers covering the last half-decade (2015-19) from the American Community Survey. After gathering data from 17.7 million (15%) of 120.7 million households nationwide, the Census Bureau offers the following information: 1. Of the 6.6 million Hoosiers one year and older, during the years 2015 to 2019, 85% (5.6 million) were living in the same house as a year earlier. Of those who did move to a different house, one-third stayed in the same county. That means 91% of the people living in Indiana did not change counties in that five-year period. 2. With only 9% of resident Hoosiers (416,300) moving across county lines, where did they come from? Turns out 59% of them (244,400) were intrastate movers, already Hoosiers from other counties. Thus, only 171,900 new people were crossing our state borders. Of these,145,500 were from the remaining 49 states, the District of Columbia (DC) and Puerto Rico (PR). The final 26,400 were from abroad. 3. Alert, foreigners! What kind of foreigners are we talking about? These were people who lived the year before in a foreign county, with half of them in Asia. Nearly 4,000 lived in Europe, and 3,000 each in Africa or Central America. Some may have been Americans return home after a stint abroad.
  • INDIANAPOLIS – My phone buzzed. “Hello,” he said. “I’ll write your column this week.” “You call up and expect me to abandon my pulpit.” I objected. “You don’t know me?” he said. “I’m Donnie Daze, TV ethicist, guide to millions who seek a self-righteous path.” “A TV evangelist!” I laughed. “What dogma do you preach?” “TV Ethicist!” he insisted. “ I don’t preach. I teach from first principles about human nature.” “What first principles?” I asked. “Survival via self-interest,” Donnie answered. “the foundation of rational thought, the heart of social responsibility, the essence of the social contract.” I felt uncomfortable. 
  • INDIANAPOLIS –  The 2020 Census tells us Marion and Hamilton counties accounted for 40% of the state’s population growth of persons 18 years and older, with 37% of Indiana’s increase in occupied dwelling units from 2010. Meanwhile, over the last decade, Delaware and Grant counties led the state in both lost population 18+ and a decline in the number of occupied dwellings. Vacancy rates can be difficult to interpret. A housing unit may be vacant because it has been abandoned or is unsuitable for occupancy yet is still standing. It may be awaiting sale or rental. Or it may be a second home or a seasonal dwelling. In 2020, Indiana’s vacancy rates were lower in 83 of 92 counties. They ranged from less than 5% in the suburban Indianapolis metro area (Hancock, Hendricks, Hamilton and Johnson counties), to more than 20% in four counties.
  • INDIANAPOLIS – The Census Bureau’s Aug. 12 release of 2020 data gives us a small window into changes in the Hoosier housing market. While Indiana gained 301,700 (4.7%) in population from 2010, our stock of housing units grew by 127,600 (4.6%). But those numbers hide much of what was going on. To start, changes in the number of persons, as well as the composition of the population, have important implications for housing. From 2010 to 2020, the growth in Indiana’s population was composed of an increase of 317,000 (6.5%) persons 18 and older, with a decline of 15,300 (-1.0%) in the population under age 18. Fewer children reduces the number of bedrooms a family desires and allows an older population to spread out in existing homes. Nonetheless, many older persons seek smaller quarters, if they are able to downsize and give up excessive memorabilia.
  • INDIANAPOLIS – Freedom of the press goes beyond banning oppressive government interference with the media. It also means not allowing monopolistic private forces to overwhelm the independence of local media. Please note, the term media goes beyond the newspapers and flyers of the 18th Century that are no longer the sole means of providing description and interpretation of events. Gossip and word of mouth, wisdom of the ages and oral tradition have been with us forever. Media, however, connotes a more disciplined (professional, if you will) approach to the transmission of information. We do not require certification or licensing of media personnel as we do of doctors, lawyers, plumbers and barbers. Anyone can run a blog, send a distortion of reality in an email chain, or publish a book with disruptive concepts.
  • INDIANAPOLIS – In 2010, the General Assembly, inspired by Gov. Daniels, offered voters an amendment to the State Constitution that capped property taxes as a percent of gross assessed value. Hoosiers rose to the bait. Of the 1.56 million who voted, 72% approved the measure. They believed lower property taxes were a good idea. They didn’t think through the consequences of lower local property taxes and the shift of power they granted to the General Assembly. The property tax starts with a local assessment of value. If you think the assessment is wrong, you can discuss the matter with your county or township assessor. Or you can appeal the assessment though a local board and even arouse your neighbors to protest inappropriate assessments. If your property taxes are included with your mortgage, you might be totally ignorant of your property taxes; the mortgage company pays those taxes in May and November.
  • INDIANAPOLIS – This week, we break new ground. The conclusion of this column will precede the data supporting it. But don’t consider this a permanent feature. We’ll return to slugging through the data soon enough. Indiana workers, like their brothers and sisters nationwide, find their compensation declining as a share of GDP (the value all goods and services). The details may not make the nightly news on Fox or MSNBC, it might even escape attention on NPR, the fact is of long duration and widespread. The issue is a progressive transition of income from workers to business owners and managers. That may sound Marxist, but it is very much consistent with the most admired attributes of capitalism.
  • INDIANAPOLIS – As you probably heard, Indiana is looking for people. Not just any kind of people, but the right kind of people. Educated, skilled, mobile folks. We may not really know what they want, but maybe we could figure out how to find them. From what we believe to be true, educated and skilled people are highly mobile, moving to the growing places where there are opportunities. Remember, our efforts must be “data driven” to satisfy what the state is asking of regions seeking part of that tempting half-billion-dollar bucket This suggests we look where large numbers of people have been moving from other states. Sadly, we’ll have to wait for the 2020 Census in its full, great detail, state-by-state, even metro area-by-metro area. That’s two, maybe three, years away. But we do have the 2019 American Community Survey (ACS) which might be a good proxy for our purposes. Nationally, 7.4 million Americans moved from one state to another between 2018 and 2019. As you expected, Florida, Texas and California pulled in the most people, each over 480,000 persons. (Indiana attracted 151,400).
  • INDIANAPOLIS – Some people say Hoosier education is a failure. That’s probably false. Others report Hoosiers are poorly educated. That’s true, if we measure education by degrees earned or years of schooling completed. In 2019, before the COVID crisis, the U.S. Census Bureau estimated 33.1% of Americans 25 years and older in the United States had a bachelor’s degree and/or a professional or graduate degree. Indiana ranked 42nd among the 50 states at 26.9%. We were between New Mexico (27.7%) and Alabama (26.3%). Massachusetts (45%) led the nation; West Virginia (21.1%) trailed all states. With college degrees now frequently expected, younger adults are more likely to hold the necessary degrees than their older relatives. Nationally, 37% of persons 25 to 34 years old have such degrees. Only 31% of Hoosiers in that age range do. At the other end of the age scale, 29% of Americans 65 years and older hold bachelor and higher degrees, compared with 22% of senior Hoosiers.
  • INDIANAPOLIS – My homily last week may have disturbed some loyal Hoosiers. Here was a foreigner, one who did not attend an Indiana high school, challenging a $500 million program which openly admits all is not perfect in Indiana. READI (the Regional Economic Acceleration + Development Initiative)  is an open acknowledgement that most places throughout Indiana are not attractive to talented, skilled workers whether native or foreign born, as in Ohio or Michigan. Yes, an Indiana governor and his cantankerous legislative accomplices have endorsed a program designed to make our state a more desirable place to live. My chief objection to READI is that the IEDC (the Indiana Economic Development Corporation) made the essential decisions about a massive and important program without giving it sufficient thought. The project proposals being sought were to be based on geographic rather than substantive considerations.
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