Cincinnati in for Slow Recovery, Economists Say

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Cincinnati in for Slow Recovery, Economists Say

Business Courier of Cincinnati - by Steve Watkins Staff Reporter

If you’re looking for good news about the Greater Cincinnati economy, you don’t want to hear what George Vredeveld and Dick Stevie have to say.

The two local economists don’t expect a lot of improvement in the jobs market this year, they told a crowd of more than 100 people at an annual economic forecast dinner sponsored by four local manufacturing-related organizations Tuesday.

“Employment doesn’t look strong at all,” Vredeveld, director of the University of Cincinnati’s Economics Center for Education & Research, said of the local market. “It’s going to be a while. We know if we want a sustained recovery, you’ve got to have people back at work.”

He sees employment increasing later this year. But the jobless rate probably will barely budge. As more people get to work, more will rejoin the potential work force and look for jobs.

Stevie, Duke Energy Corp.’s locally based managing director for customer market analytics, actually sees the Greater Cincinnati jobless rate inching up from 9.5 percent last year to 9.6 percent this year. He anticipates job growth, but only to the tune of a mere 0.1 percent. That still beats last year’s 3.5 percent decline.

The gross regional product, a gauge of the local economy’s growth, should rise 2 percent this year, Stevie predicted. That tops last year’s 5 percent decline, but it’s no sharp recovery.

“Local growth is lagging behind the nation’s since the recession began,” Stevie said. “And we’re not keeping up in employment.”

The weak jobs picture is an obvious problem because it affects consumer spending. But it’s also tough to get companies to spend without any signs of an improving job market.

“Because of all the risks in the economy, people really want to see some proof before they move ahead,” Stevie said. “That proof is job growth.”

Residential construction doesn’t look good, either. It’s matching the national levels, which fell off a cliff. Both have leveled off, though.

“All you can say is it looks like it hit bottom,” Stevie said.

Still, there was some good news. Manufacturing employment is matching the nation’s. And local manufacturing should pick up. The latest Cincinnati Report on Business, a survey of purchasing managers completed by the University of Cincinnati and the National Association of Purchasing Management-Cincinnati, showed that 35 percent of those surveyed reported increasing employment. Just 23 percent said they’re cutting jobs.

Business investment nationally rose by 11 percent in the third quarter after two quarters of steep declines, Vredeveld said.

“That’s a slingshot effect, and it’s not over,” he said, quoting Princeton University economist Alan Blinder.

Vredeveld expects the economy to bounce up and down this year. Each sector could experience something different. Manufacturing might be one local area that actually does better than the overall market.

“A year from now, a lot of people will say that was a lousy year, and others will say that was a pretty good year,” he said. “I think there will be a lot of pain and concern in certain sectors. We have a lot to adjust to.”