It was delightful to read in the newspaper that Kokomo, Elkhart-Goshen and Columbus were among the leading metropolitan areas in economic growth in 2012. The report came from the federal Bureau of Economic Analysis, and stimulated local public relations people to rejoice with news releases that were sheer exhilaration.
After all, the combined 381 metro areas of the United States managed growth of their Gross Domestic Product (GDP) by just 2 percent for 2012. But our stars shined: Elkhart-Goshen at 11 percent, Columbus at 10 percent and Kokomo at 8 percent. Blow that trumpet, thump that gong. Don’t let reality cast a shadow where the stars are shining.
The joy could have been as great and the self-congratulatory remarks from state and local offices could have been more useful if the full story were told.
Adjusted for inflation, GDP for the Elkhart-Goshen metro area remains $586 million or 6 percent below its 2007 peak. The Kokomo metro area is $507 million or 12 percent below its 2007 peak. These two sterling trend setters remain among the most economically depressed areas in the U.S.
Kokomo ranks 367th of 381 metro areas in its compound annual rate of growth from 2007 to 2012. Elkhart-Goshen ranks 321st. These two Indiana metro areas suffered severe declines in 2008 and 2009 from which they have not recovered. Yes, they are doing better, but, as noted above; each has an added half billion dollars of output to generate before they return to their 2007 levels.
Columbus, by contrast is among the elite metro areas in the country, with real GDP 10 percent greater than in 2007. Bloomington and Lafayette also are among the top 100 metros in average annual real growth rates between 2007 and 2012.
The fanfare that accompanied release of these numbers is not unusual. We have many offices and "news" services that are agents of happy tidings. To see data in perspective is not part of their mission statements.
They take almost any news release at face value. For example, both Trine University in Angola and the University of Notre Dame in South Bend recently released their economic impact studies. Trine modestly claims a $73 million impact on Indiana while Notre Dame touts a $1 billion dollar impact on the South Bend community. (A Notre Dame home football game is worth $18 million, in case you wondered.)
Colleges and universities feel impelled to declare their importance through annual economic impact studies. Such studies are generally massive agglomerations of dubious assumptions. These studies are for public relations and not for critical examination.
Yet they are reported by the media as if they were solid academic research when they have many inherent faults. What is the academic community trying to prove to whom?
If city governments or the chambers of commerce are impressed by such numbers, we have to wonder about their naivete. But then they are the ones who tout the GDP growth numbers. Economic data are part of a large scale fantasy exchange.