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The IBR is a publication of the Indiana Business Research Center at IU's Kelley School of Business

Terre Haute

Deputy Director, Indiana Business Research Center, Kelley School of Business, Indiana University

The Terre Haute economy, when measured by its gross domestic product (GDP) in terms of sheer dollar volume, has grown from $3.5 billion to $5 billion from 1987 to 2007. (1)

At the same time, personal income earned and accrued by residents of the Terre Haute metro area has grown far more significantly, from $2 billion in 1987 to $5 billion in 2007. This is a telling convergence with GDP and likely due to losses in manufacturing jobs and resulting increases in commuting to and from jobs in bordering Illinois. These jobs have been on the upswing since the early 2000s.

GDP (2) and personal income for the region are forecast to grow, albeit slowly, for the next several years. Personal income is expected to overtake GDP and grow to approximately $7.2 billion by 2017 (see Figure 1).

Figure 1
Comparison of GDP and Personal Income in the Terre Haute MSA, 1987 to 2017

Figure 1

Personal income, however, continues to lag that of the state and Indiana continues to lag the nation, as seen in Figure 2. However, it is more important to know the context of personal income—that is, where does it come from? In the case of Terre Haute, the majority of personal income comes from the sweat of its residents' brows—or in economic terms, from earnings generated by residents within the metro area or those who work outside the area and bring the money back into the metro (see Figure 3).

Figure 2
Per Capita Personal Income

Figure 2

Figure 3
Per Capita Personal Income in the Terre Haute MSA, 2005

Figure 3

Terre Haute's work earnings, for commuters to and residents of the area, totaled a whopping $3.1 billion for 2005 (the latest year of real data available). Total personal income in the metro area totaled $4.4 billion once accommodations were made for residence and other income based on social security payments to seniors and the disabled; unemployment checks and welfare payments; as well as interest, dividends, and rent accrued to those with stocks, portfolios, and rental properties. Both figures tell an economic story—the metro is a job hub and a residential hub for the larger region as a whole.

While one might hope for a stronger forecast, the signs suggest the Terre Haute economy will “hold its own.” More aggressive economic development plans seem to be underway for the area, particularly in Vigo County, and residential growth in the surrounding counties remains strong. Reliance on high paying manufacturing jobs is being replaced by enthusiasm for other industries, including business services and firms involved directly or indirectly in the life sciences. This region has strong and sustainable assets, with universities in the area engaging ever more in economic and strategic development.

Notes

  1. These are constant dollars, meaning they take inflation into account.
  2. Gross Metropolitan Product: Such a quantifier for metropolitan areas or counties is relatively new and also subject to problems. Consider that the United States has borders, and for goods to cross them, there is paperwork to help quantify those goods and services. This is not the case with states and metros, so economists use detailed income and earnings by industry data from the Bureau of Economic Analysis (BEA) to help produce a scale to measure what an area’s economic output is on an annual basis. The numbers used in this article were provided by Economy.com, but are based on the BEA data. More information is available at the BEA website (www.bea.gov).