99 years of economic insights for Indiana

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

Executive Editor, Carol O. Rogers
Managing Editor, Brittany L. Hotchkiss


University of Evansville, Evansville

It is time for a change. Faithful readers of this space will recall that the Evansville economy did not show substantial growth after the turn of the century, according to the index of economic activity maintained at the University of Evansville. That index used fixed 1998 value-added components from that year’s gross domestic product (GDP) as its fixed weights. This fixed weight index methodology is similar to the way the Consumer Price Index is calculated. This year, the weights have been updated and the hospital sector has been added.

The new categories capture about 60 percent of value-added for the nation. The old index indicates a small contraction from 2002 to 2003 while the new index indicates a substantial increase from 2002 to 2003. The new index posts a decline of 2.5 percent from 2003 to 2004 (see Table 1). This decline was centered in construction and finance. Even the strong and continued growth in health and the other sectors was not sufficiently strong to counteract the negatives reported in construction and finance.

Table 1
Evansville’s Old and New Indices

Table 1

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Interest rates will continue to move away from historic lows to levels near their historic averages. These increased interest rates are not likely to make doing business in the durable goods or construction sectors any easier. The effects of higher interest rates on the finance sector remain uncertain. We can thank the employers of our area for substantial job growth in the past and hope for stability in the future. Again, barring any unexpected local, national, or international developments, 2006 will be much like 2005 for the Evansville area.


The index is defined as follows: Health = total gross patient revenue in acute care hospitals. Industrial Production = electricity sold to industrial users. Construction = total value of new construction permits in Vanderburgh County. Transportation = annual boardings at the Evansville Regional Airport. Trade = metropolitan area employment in wholesale and retail trade. Finance = finance sector employment.