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Dayton and Southwest Ohio Economy Richard Stock, PhD. Business Research Group University of Dayton State of the Dayton Metro Area (in December Each Year, 2000-2013) • Dayton lost 32,400 jobs in the two year period from December, 2007 to December, 2009. • It recovered 7,900 of those jobs in the 2 years to December, 2011 • That recovery has stagnated in the last two years Employment (in 000s) 460 443.1 440 420 400 404.7 378.5 380 360 340 320 372.3 State of the Dayton Metro Area: Last 4 Years (in December Each Year, 2009-2013) • Growth was steady in the Dec. 2009 to Dec. 2011 period. • Last 24 months, loss of 1700 jobs Employment (in 000s) 382 380.2 380 378.5 378 376 376 374 372 370 368 379.7 372.3 Total Employment Index: Dayton and Cincinnati Metros compared to Ohio and the United States, Dec. 2000-2013 Construction Employment Index: Ohio and the United States, Dec. 2000-2013 Manufacturing Employment Index: Dayton and Cincinnati Metros compared to Ohio and the U.S., Dec. 2000-2013 Trade, Transportation, Utilities Employment Index: Dayton and Cincinnati Metros compared to Ohio and the United States, December 2000-2013 Prof. & Bus. Serv. Employment Index: Dayton and Cincinnati Metros compared to Ohio and the United States, December 20002013 Education and Health Services Index: Dayton & Cincinnati Metros compared to Ohio and the United States, December 2000-2013 Government Employment Index: Dayton & Cincinnati Metros compared to Ohio and the United States, December 2000-2013 Note that Government Employment Actually Rose in Dayton Metro from 2008 to 2010 Federal Government Employment Index: Dayton & Cincinnati Metros compared to Ohio and the United States, December 20002013 Note that Government Employment Actually Rose in Dayton Metro from 2008 to 2010 Local Government Employment Index: Dayton & Cincinnati Metros compared to Ohio and the United States, December 2000-2013 The Income Piece • How Big is the Wage Problem? Average Weekly Earnings in Dayton and Cincinnati relative to Ohio and U.S., November 2007-2013 (2013 Constant Dollars) Relationship to National Economy Cyclical factors • How closely linked is the Dayton Economy to the National Economy? • From December, 2002 to December, 2013, 92% of variation in monthly Dayton Metro Area unemployment rate can be explained by variation in the U.S unemployment rate United States, Dayton Metropolitan Area Monthly Unemployment Rates, December 2002-December 2013 United States, Dayton Metropolitan Area Monthly Unemployment Rates, December 2006-December 2013 United States, Dayton Metropolitan Area Monthly Single Housing Units Building Permits, August 2001-November 2013 (Aug 2001 =100) Dayton Metropolitan Area Monthly Single Housing Units Building Permits, November 2002-November 2013 Number of Unemployed in Dayton Metropolitan Areas, 1990November 2013 Forecasting the Next 3 years • Note that the Dayton Metropolitan Areas has mirrored the Country as a whole more closely in the last few years. • What are the implications of the National Economic Forecast? • Federal Government and Local Employment Declines Have Already Taken a Toll. How Much More? Survey of Professional Forecasters, Philadelphia Federal Reserve Bank (4th Quarter Estimates) Unemployment Rate (%) Real GDP (%) Quarterly data: 2014:Q1 2014:Q2 2014:Q3 2014:Q4 2015:Q1 CPI Inflation Rate (%) Headline Core 2.0 3.0 2.8 2.7 3.2 6.7 6.6 6.4 6.3 6.2 1.7 1.7 1.9 2.0 2.0 1.8 1.8 1.9 1.9 2.1 Annual average data: 2014 2.8 2015 3.1 2016 3.1 2017 2.4 6.5 6.1 5.7 5.5 1.8 2.0 2.1 1.9 2.0 2.1 Implications of National Forecast for the Dayton Metropolitan Economy Dayton Metro Real GDP (%) Unemployment Unemployment Number of Rate Unemployed Rate (%) Quarterly data: 2014:Q1 2014:Q2 2014:Q3 2014:Q4 2015:Q1 2.0 3.0 2.8 2.7 3.2 6.7 6.6 6.4 6.3 6.2 6.9 6.8 6.6 6.5 27,500 27,200 26,600 26,300 Annual average data: 2014 2.8 2015 3.1 2016 3.1 2017 2.4 6.5 6.1 5.7 5.5 6.7 6.3 5.9 5.7 26,600 25,400 23,800 23,000 Defense Budget Squeeze Impact • Number of Jobs Linked to Wright Patterson Air Force Base Activities ~ 25,000 to 30,000 • Cuts are likely to be program specific for particular big ticket items, impact on Wright Patterson related employment is uncertain. • If one assumes a 10% drop in WPAFB related employment over a 3 to 4 year period, that implies 2500 to 3000 fewer jobs or an annual impact of about a 1000 jobs. • It represents a head wind on local job growth • One potential upside – potential wins in next BRAC rounds Summary • Job growth in the Dayton Metro Area economy has stalled in the last 24 months • The Dayton Metro Area Unemployment rate remains closely linked to National levels but is lagging behind • While the Dayton economy mirrors more closely the national economy in 2013 than at any point in the last 20 years, reductions in planned defense spending will constitute a headwind over the next few years.