By Daniel Downs
The Ohio Monthly Financial Report came out earlier this month. In it, the Office of Budget and Management summarizes the economic condition of the state relative to both the Midwest region and the nation. Economic criteria covered by the Report include growth of the economy, employment, consumer income and spending, manufacturing, construction, as well as government revenues and expenditures.
Economic growth as measured by GDP continues at a slow pace. Leading economic indicators decreased in April. Contributing to the slight decline of the economy is supply chains disruptions to automakers caused by the Japan earthquake and the negative impacts of flooding, tornadoes and fires here in the United States. Even so, the Ohio Coincident Economic Index continues to report increased growth. In fact, the 12 month rate of change increased to 6.3percent–the fastest since the 1990s.
Ohio gained 8,600 new jobs in April while unemployment decreased from over 9 percent to 8.6 percent, which 0.4 percent less than the national average. Employment increased in all sectors except local government. Unfortunately, Ohio has 357,000 fewer employed citizens than before the recession.
After decreases in unemployment claims during the first three months of 2011, Dayton area unemployment increased from 2,878 to 3,461 or 20 percent, according to the Ohio Bureau of Labor Market Information. This was reflected by a small decline (0.1%) of employment in April. In spite of occasional increases and decreases, Dayton area employment growth has remained flat for over a year unlike the rest of Ohio.
While Ohio jobs increased, manufacturing production decreased in April. Because of the impact of the Japan disaster, this trend is expected to continue to the end of the year.
Nationally, commercial construction increased, but remained flat throughout the Midwest. Private residential construction showed the same trend. The Dayton area was no exception. Private residential building permits increase 26 percent. Housing prices however continue to fall in Ohio and throughout the nation.
Some question the accuracy of the Case/Shiller Home Price Index. Yet, the Federal Housing Finance Agency (FHFA) also shows similar declines in home prices. For Ohio, the FHFA reports a 2.9% decline in home values for the first quarter of 2011, which is 6.7% less than in 2010.
Ohio personal income exceeds that of the national average. Personal income increased 3% during the fourth quarter of 2010, which is 3.8% above the previous year. Personal spending has kept pace with increased income. At least part of the increase has gone not for more products but for the same products at higher prices like gas and food. In other words, real disposable income is unchanged.
In places like Xenia, real income is even less because of collectively self-imposed higher taxes.
The Report also addressed where personal income was being spent. Retail sales were up in April because of Easter. Curiously, sales at drug stores, apparel stores, and auto dealerships were all down, but sales at luxury retailers significantly increased.
Who would have guessed that the federal stimulus (QE1 and QE2) would create inflation instead of inspiring the wealthy to create many more good new jobs? Maybe they did at luxury retailers.