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

443.1

404.7

372.3

378.5

320

340

360

380

400

420

440

460

Employment (in 000s)

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

372.3

376

380.2 379.7378.5

368

370

372

374

376

378

380

382

Employment (in 000s)

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 2000-

2013

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 2000-

2013

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, 1990-November 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 (%)

CPI Inflation Rate (%)Real GDP (%)

Headline CoreQuarterly data:

2014:Q1 2.0 6.7 1.7 1.82014:Q2 3.0 6.6 1.7 1.82014:Q3 2.8 6.4 1.9 1.92014:Q4 2.7 6.3 2.0 1.92015:Q1 3.2 6.2 2.0 2.1

Annual average data: 2014 2.8 6.5 1.8 1.92015 3.1 6.1 2.0 2.02016 3.1 5.7 2.1 2.12017 2.4 5.5

Implications of National Forecast for the Dayton Metropolitan Economy

Unemployment

Rate (%)

Dayton MetroReal GDP (%) Unemployment

RateNumber of

Unemployed

Quarterly data: 2014:Q1 2.0 6.7 6.9 27,5002014:Q2 3.0 6.6 6.8 27,2002014:Q3 2.8 6.4 6.6 26,6002014:Q4 2.7 6.3 6.5 26,3002015:Q1 3.2 6.2

Annual average data: 2014 2.8 6.5 6.7 26,6002015 3.1 6.1 6.3 25,4002016 3.1 5.7 5.9 23,8002017 2.4 5.5 5.7 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.