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Monday, April 6, 2020
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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  — State Senator Barry Ballyhoo called last week. “How ya doin’, boy?” He asked the familiar question during this era of sequestration. “OK,” was my reply. “Well, youngster,” he said. “I was ruminatin’ about this here computer census. We done filled out our online form. ’Twasn’t any problem. But it done left me wonderin’ if anybody really cares.” “Oh, Senator, you can bet they do,” I replied. Then I repeated the many reasons Hoosiers have a stake in the census: The federal and state money distributed by formulas using population data, the drawing of political boundaries, and not incidentally, the issuance of permits by the alcohol and tobacco commission. “Yes, yes, I know all that,” he said impatiently. “But do Hoosiers care? Does it bother them last week’s figures show 55 of our 92 counties shrank in population between the census in 2010 and the estimates for 2019?”
  • INDIANAPOLIS  —  The virus pandemic has disrupted our lives and, in many cases, done serious harm to our livelihoods. Working from home helps some, but not all workers can benefit. Without such serious disruption, we take commuting for granted. Most Hoosiers work and live in the same county, but there are many who cross county and state lines for work. In doing so, they move a lot of money. According to the U.S. Bureau of Economic Analysis, in 2018, workers in Indiana earned $220.6 billion. But not all of that appeared in their paychecks. They, and their employers, contributed $24.7 billion (11.2%) to federal government insurance programs (Social Security, Disability Insurance, Medicare, etc.) that provide our economic safety net. Thus, working for Hoosier businesses and governments netted $195.9 billion. Yet, as we know, “foreigners” from Illinois, Ohio, Michigan and Kentucky come into our state and take home money earned here. Fortunately, Hoosiers also cross state lines and bring back money they earn in those “alien” lands.
  • INDIANAPOLIS  — I didn’t title this column “Women at Work” because it suggests only women who are employed are working. At the same time, I don’t do what the Bureau of the Census has done in a recent graphic release: Provide you with only the most recent differentials between the earnings of men and women. Truth requires context. And the truth is, as it has been for ages, women earn less than men. In 2018, the most recent year available, the median earnings of women employed in all types of jobs, full-time, year-round, was 81.2% of men with the same employment profile. This figure is the most recent measure of the economic disparity between men and women employees. What we aren’t told is about a  two-point improvement in the relative earnings of women from 79.2% in the preceding five years. Nor do we see the deterioration of the relative earnings of African-American and Hispanic women vis-à-vis men of the same description
  • INDIANAPOLIS  — The first warmish day brought forth green shoots of nascent flowers. And, lo, Faye of the Forest was on my deck railing, feisty as ever. “You waste a lot of time,” she announced. Not waiting for my defensive counter-thrust, she continued, “Every week you turn data sets into kindling for your writing fire. You spend hours on spreadsheet manipulations. What you want is already out there, done by others and available for free.” “And you know this how?” I asked. “I have my ways,” she said coyly, tossed her hair as women do, and flitted off into the forest. She was right! Last week, the Brookings Institute posted economic comparisons of the nation’s 192 largest metropolitan areas. Indianapolis was in the group of 53 metros with over one million persons and ranked 27th in growth of jobs, Gross Metro Product (GMP) and change in jobs at young firms, from 2008-18.
  • INDIANAPOLIS  — The spread of the coronavirus is serious. It should not be taken lightly, nor need we over-react and assume damages that may not occur. To prepare is appropriate. To assume what could happen, will happen, and already has happened, is foolhardy. The stock market response has been irrational and irresponsible. Irrational because we can respond appropriately with careful direction of resources by the professionals who understand the needs. Putting a bunch of political appointees “in charge” is only a theatrical step. Irresponsible because it gives rise to a panic, a media frenzy, and a misdirection of our attention from the preparation actually required. 
  • INDIANAPOLIS  — This week there’s nothing but good news to report about Indiana. Many readers will say this is long overdue. Rightfully, they want to feel good about our state, to read about our achievements and opportunities. Enough with ugly clouds of statistics, let’s celebrate the sunlight. We open with a report from the cheery folks at the Tax Foundation who discovered, in the depths of data from the Bureau of the Census, federal aid was 38% of Indiana’s total state general revenue in FY 2017, the most recent year of data available.  The national figure was a mere 23%. Indiana ranks 10th highest among the 50 states in reliance on federal funding. After years of complaining about not getting our fair share of federal aid to states, we’ve broken into that elite quintile, just behind West Virginia and a fraction ahead of Kentucky. Still, some Hoosiers yearn for those days in the 20th Century when Indiana refused to seek or accept federal funds. But now we’re hep, we’re woke.
  • INDIANAPOLIS  — Owen Greene lives a quiet life in Southwestern Indiana. He’s learned not to challenge the opinions of his neighbors. Yet, this past week he called me with a question: “Are wages lower in Indiana because our cost of living is lower than in the rest of America?” “No!” I said in my most controlled manner. “Employers like to tell workers that’s the reason wages can be lower here than elsewhere, but that’s not the truth.” “You mean they’re lying?” Owen looked surprised. “They’re not lying, Owen,” I said. “They just accept a popular fiction, an easy story to believe.” “But it makes sense,” Owen insisted. “Workers won’t demand as much in wages, if the cost of living is low.”
  • INDIANAPOLIS  — Most folks have an intuitive understanding of Gross Domestic Product (GDP). They know GDP measures the current activity of the nation’s legal economy. The change in annual GDP is the definitive statement about our national economic performance. It’s far better than the monthly unemployment rate or the jobs numbers to assess that performance. At the same time, Hoosier politicians seem unaware that GDP figures from the US. Bureau of Economic Analysis are now out there for states and counties. Indiana’s GDP figures don’t tell the same story as we get from those officeholders. Simply put, in the last 20 years (1998 to 2018), Indiana has exceeded the national GDP growth rate only six times. And not once since 2014. We have seen Indiana’s share of national GDP fall from 2.05% to 1.77%. Doesn’t seem like much? That insignificant 0.28% was $57.6 billion in 2018 alone, an amount which would have raised our state GDP by 16%.
  • INDIANAPOLIS  — One night recently, in a moment of unusual calm, I sat down to read the 2019 Annual Report of the Indiana Department of Revenue. It’s handsomely produced. Lots of pictures with employees saying “cheese.” Far too short on meaningful data, as far as I’m concerned, but loaded with numbers only administrators could love. However, I was able to figure out that Indiana personal income taxes (state and local) amounted to $8.9 billion and accounted for 42% of the state’s $21 billion in revenue in fiscal 2019 (July 2018 to June 2019). Add to that sum $8.1 billion in sales taxes collected and you have households paying 81% of the Revenue Department’s collections. This, of course, doesn’t count gambling, motor fuel, and other taxes passed along to customers by the businesses building taxes into their prices. The direct tax on corporate income is a spectacular 4.7% of total tax collections.
  • INDIANAPOLIS – Ever buy hamburger? You pay more for less fat and more beef. I think of that whenever I hear about the blatant incompetence and arrogant ignorance of state or local government workers. Want less fat and more beef? Pay for it! The surprising element is so many excellent government workers remain diligent, dedicated and on the job. Some of these outstanding public servants report to unprepared elected officials or their political appointees. We don’t have sufficient numbers of people who understand their jobs and appreciate their responsibility to the public that pays them. But there is a light shining in the Governor’s office. Between Christmas and New Year’s Day, Gov. Eric Holcomb announced a range of pay increases for existing state employees. Based on merit reviews, employees can receive two, four, or six percent increases, beginning next month. That’s good. But recognize how bad it has been for so long and getting worse. In 1998, 20 years before our latest data, on average, Indiana paid state workers 22% less than the national average for state employees. In 2018, our state employees were paid 27% below the U.S. average. Indiana sank from 46th to 48th place among the 50 states in paying state workers, ahead of only South Dakota and West Virginia.
  • INDIANAPOLIS  —  As Gaul was to Caesar, so too is personal income divided into three parts by the U.S. Bureau of Economic Analysis (BEA). This is important because political leaders have latched onto per capita personal income (PCPI) as a favorite measure of economic well-being. They are wrong, but it takes generations for old ideas and politicians to be retired.   The first and biggest part of Hoosier personal income is what we earn as workers. That’s 64.3% for us (15th among the 50 states), slightly higher than the nation’s 62.6% in 2018. Both figures are down from their 2008 levels; about two percentage points nationwide and 1.5 points in our Hoosier Holyland. The second part of personal income is composed of what we “earn” on our investments: Dividends, interest, and rent. Note: Neither the growth of your holdings in the stock market nor the increased value of your house is included.

  • INDIANAPOLIS — The moving van pulls away leaving new people and their strange possessions next door. There is something different about them and the things they own. Something strange that suggests they are not quite like us, long-time residents of this place. Where do those strangers come from? We’re fortunate the U.S. Bureau of the Census has studied that question concerning persons who were one year of age and older in 2018. They found 84.9% of Hoosiers were folks who lived in the same house as they did in 2017. But that’s below the national average of 86%, and we rank 32nd among the 50 states (plus the District of Columbia). Hoosiers are less homebodies than other residents of this nation? Where did those strangers come from? Take heart! Indiana ranks 10th in the nation (12.4%) in terms of persons who moved within the same state in the last year. Those strangers may be from just around the corner, or as far away at Angola, Aurora, Mt. Vernon or Whiting. Thus, they’re not really strangers. Take them a welcoming casserole. Make sure you exchange cell phone numbers and don’t hesitate to give them your email address.
  • INDIANAPOLIS — Watch out!” Sorethroat said. “They’re coming back and, if the past is prologue to the future, we’re in danger.” He and I were in the parking garage opposite the Statehouse. As usual, this long-time state employee was smoking. In addition, he was fuming. “The Indiana General Assembly,” he continued, “will gather for Organization Day on Nov. 19. Ha, it’s more like disembowelment day.” “Why do you say that?” I asked. “It’s when they remove whatever guts a senator or representative may have,” he answered. “You know, most of them are really good people who want to do what’s best for Hoosiers. But the leadership wants them to be gutless followers of the party line. “’Surplus over Service,’ that’s the mantra they have to chant,” he declared.

  • INDIANAPOLIS  — Just a few more weeks and we’ll be in 2020. Incumbent office holders will discover numbers showing we are better off than four years earlier. The out-of-office wannabes will have their data showing we are worse off. How can both be telling the truth? As economists love to say, “It all depends…” What data are you using, Indiana in a national or regional context? Real per capita personal income, a favorite measure of some political leaders, shows Indiana with an average annual increase of 1.82%, between the second quarters of 2015 and 2019, after adjustment for inflation. The United States grew by 2.12%. That “little” 0.30% average annual difference is worth $575 for each Indiana resident in 2019 dollars. That’s if we were just “average” instead of 29th in the nation. But let’s put this in a regional context and we’ll see if Indiana shines as bright as that moon over the Wabash. The Great Lakes region includes Ohio, Michigan, Illinois and Wisconsin, along with Indiana. The region as a whole saw real per capita personal income rise of 1.89%. Sad to say, only Ohio at 1.80% came in lower than our 1.87% growth rate. But, take heart! Kentucky managed only a 1.36% average rate. As you know, any time we beat out Kentucky, Hoosiers are winners.

  • INDIANAPOLIS  — Do you linger over your morning coffee wondering how to do something meaningful? While the commercials are on TV during your favorite program, do you ponder the current condition of your county, our state and nation? Then listen up! You can make a difference within the next two weeks. VOTE in the Nov. 5 election, either in person, at an early-voting station, or by mail-in ballot. Vote for local officials who show some energy in their campaigns. We’ll need that energy in the coming months of 2020. Your community/county should have a vigorous Complete Count Committee for the 2020 Census. Local effort to encourage participation in the census is one important means of protecting our constitutional rights and our self-interest. Every Indiana resident must be counted. Why? The number of persons recorded in our communities statewide will determine our representation in U.S. House of Representatives in the 117th Congress. Right now, we have nine representatives. It could go down again, as it has four times in the last 100 years.
  • INDIANAPOLIS –  Indiana’s public forests are primarily south of I-70, yet our population and industry are located primarily north of that interstate. Preserving existing public forests while developing new forested areas throughout the state would correct this imbalance. At the same time, enhancing the urban forest canopies, the linear street forests in our cities and towns, needs to be encouraged. These are long-term components of Indiana’s essential infrastructure that offer significant benefits on at least six levels: 1. Forests are silent workers cleaning the air of harmful substances while providing oxygen. They also are habitat for innumerable plants and animals. Trees stabilize ground water levels, reduce land erosion, and protect properties from flooding. The benefits of forests are local and world-wide. In cities, they not only improve the air we breathe and provide shade to reduce air-conditioning expenses, but they raise property values as a desired amenity. 2. Indiana has an undesirable image as a place lacking natural attractions of mountains and a seacoast. Forests can provide a place rich in opportunities for healthy, stimulating outdoor recreation, exploration, and education. Tourism and corporate investments are determined by the image we project.
  • INDIANAPOLIS — Here’s a simple fact. In 2017, according to the U.S. Bureau of Economic Analysis, the average wage or salary (AW&S) in Indiana was $46,897. At the same time, the figure stood at $55,463 for the United States as a whole, or nearly 19% above Indiana’s average. It’s easy to get into a tizzy about this. Loyalists would boast, “Our cost of living is lower than average.” Rebels might quote me saying “What Indiana produces is less valued than what is produced on average in the U.S.” However, right now, I would like to challenge that national figure. The data for the U.S.  include the District of Columbia, which is not a state. The AW&S for D.C. in 2017 was $91,720, 65% above the national figure and nearly double Indiana’s more modest level.
  • INDIANAPOLIS — Newspapers and television news have pointed to declines in the shipments of recreational vehicles as a warning signal of a forthcoming national recession. It’s true that nationally RV shipments are down. They have been declining, compared to the same month a year earlier, each month from August 2018 through July of this year. For the year as a whole, shipments in 2018 were 4.1% below 2017. However, 2017 was a bonanza year for the industry, shipping 504,600 units, up 17.2% from 2016. Yet that does not tell the story well; in March 2018 alone, shipments reached 50,600 units, a vertigo height for RVs. 
  • INDIANAPOLIS — This November Hoosier voters will make important decisions about the future economy of our state. They will choose the mayors and council members who will determine the members of local zoning boards and planning commissions. The choices of those boards and commissions will set the course of the state for 50 or more years. We have many examples of good and bad land use in Indiana’s past; let’s look at some recent developments. Boone County and Lebanon have guided development along their portions of I-65. Warehouses, heavy machinery sales and services, retail trade, and highway traveler services will be found adjacent to the interstate. Crown Point, in Lake County, has allowed housing right along I-65, north and south of the 109th Avenue (Exit 249). This breaks the line of commercial, industrial, and institutional uses adopted by Merrillville further north.

  • INDIANAPOLIS — As the leaves begin to fall, young people are heading back to school. For many, this is the senior year of high school. For others, this is the first year at college, in the military, or working at a full-time job. For each, it means answering the question: “So, whatcha gonna do wit ya life?" Little do they know they will spend the next 60 years trying to answer that question. Whereas, at some distant date, schooling meant education; today it means occupation. Some policy-makers want to stress maximizing the future earnings of students as the goal of schooling. But all students, it is believed, should be “job ready” when they graduate from high school and/or college. They should be “trained” for the workforce, ready to meet the expectations of today’s employers, as well as prepared for an uncertain future.
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  • Pence says U.S. pandemic is 'comparable' to Italy
    “We think Italy may be the most comparable area to the United States at this point.” - Vice President Pence, to CNN on Wednesday, after he was asked how severe the COVID-19 pandemic will get in the United States. The pandemic has hit Italy the hardest to date.
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  • President Trump, Gov. Holcomb address the pandemic in their own words
    The COVID-19 pandemic is becoming the story of our time. As Sen. Todd Young explained, unlike the Great Recession of 2008-09 and the Oil Shock recession of 1979-82, what we are experiencing today is a double hammer: A pandemic and a severe economic panic. The Hoosier State is poised to go from a historic low 3.1% unemployment rate to double digits in the span of a month. At least one pandemic model says 2,400 Hoosiers will die.

    Tough times shift our attention to leadership. Here are quotes from President Trump and Gov. Eric Holcomb as the pandemic approached the U.S. and then impacted our nation and state.

    President Trump

    Jan. 22: “We have it totally under control. It’s one person coming in from China, and we have it under control. It’s going to be just fine.” – CNBC interview.

    Feb. 10: “Looks like by April, you know, in theory, when it gets a little warmer, it miraculously goes away.” – New Hampshire rally.

    Feb. 24: “The coronavirus is very much under control in the USA. … Stock market starting to look very good to me!” – On Twitter.

    Feb. 25: “China is working very, very hard. I have spoken to President Xi, and they are working very hard. If you know anything about him, I think he will be in pretty good shape. I think that is a problem that is going to go away.”

    Feb. 26: “We’re going to be pretty soon at only five people. And we could be at just one or two people over the next short period of time. So we’ve had very good luck.” – At a White House news conference.
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