Fitch lowers Ohio’s rating, but its a great time to buy a business

Fitch Rating lowered its financial outlook of Ohio from stable to negative. Fitch said the negative outlook was based on the long-term decline of Ohio’s economic performance, exacerbated by the national recession, and the likelihood of continued economic erosion.

Factors contributing to Fitch’s negative outlook include the decline in manufacturing, a slowing service sector, and the severe economic downturn affecting the housing market, auto assembly plants, plus the state’s negative economic and revenue forecasts.

“Since the last recession, employment growth had been limited, rising a total of 0.5% from 2004 to 2007, compared to U.S. growth of 5.9% over the same period. October 2008 employment is down 0.3% year-over-year, compared to 0.9% losses for the U.S. overall. Personal income, though growing, continues to underperform comparable national figures: personal income rose 4.7% in Ohio in 2007, versus 6% nationally; second quarter 2008 personal income rose 4.2%, versus 5.2% nationally,” according the Fitch report.
In spite of the bad news, Fitch rates Ohio’s bonds at AA+. For Greene County, it gets even better. Fitch rating of the county is AAA.

Fitch’s rating of Greene County as a good investment helps explain why writers for business journals like Entrepreneur say now is a good time to buy a business.

“In the past few recessions, franchises fared well–even thrived–as ex-corporate workers sought more autonomy and personal reward than their previous jobs offered. But this downturn feels markedly different, and prospective franchisees like you are understandably cautious about rushing into a long-term investment, according to Janean Chun.

She says franchisers are responding by reducing franchise fees, reducing or eliminating mandatory marketing expenses, and lowering the costs of products supplied.

What is true of franchises may be relevant of other types of businesses.

Countering the current negative outlook is the continued increase of personal income reported by both Fitch and the Bureau of Economic Analysis (BEA). Another promising trend is the retail sales. U.S. Census Bureau reports 3rd quarter retail sales increased 0.5% over 3rd quarter sales last year. The increase of e-commerce sales was 5.7%.

Being part of Greene County, Xenia may also benefit from these positive trends. That’s the hope.

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