November 15, 2011
Economy fundamentally sound, ready to be unleashed
For the fourth year in a row, the Cincinnati USA Partnership and the Northern Kentucky Chamber of Commerce worked together to develop and present a Regional Economic Outlook. This valuable 2012 business-planning tool was prepared by the Partnership’s Regional Economic Advisory Committee.
The 2011 forecast called for slow growth for an economy still working its way out of the downturn that began in 2008. While the recovery has been painfully slow, the regional economy did grow in 2011, and is expected to continue to grow in 2012.
Gross regional product
After increasing 2.1 percent in 2010, Cincinnati’s growth in 2011 slowed with real Gross Regional Product (GRP) increasing an estimated 1.7 percent for the year. Based on the anticipated strength of the national economy, GRP is expected to increase 2.4 percent in 2012, keeping pace with the forecasted 2.4 percent increase nationally.
Wage and Salary Employment
During the six-year expansion between November 2001 and December 2007, the Cincinnati metro area added 44,200 jobs, an increase of 4.4 percent. By the end of the recession the metro area had lost 62,400 jobs, a decrease of 5.9 percent. Since the start of the recovery more than two years ago, only 2,900 net new jobs have been created in the metro area. Employment is forecasted to increase 1.4 percent next year, adding 13,900 jobs.
Employment gains and losses have differed significantly across industries during the recession. Between July 2007 and July 2011, the manufacturing sector declined by 12,200 jobs. However, over the past year, manufacturing has enjoyed a strong rebound in employment adding 3,100 jobs between July 2010 and July 2011, an increase of 8 percent. Manufacturing employment growth is expected to slow in the last quarter of 2011, ending the year up 4 percent compared to 2010. In 2012, the manufacturing sector is forecasted to grow 2.75 percent adding nearly 3,000 jobs.
While the unemployment rate has come down a bit over the past 12 months it is expected to end the year at 9.1 percent and decline slightly to 8.7 percent in 2012, still quite high compared to the average unemployment rate of 4.4 percent during the decade prior to the recession.
Construction and Real Estate
The committee expects new residential units to increase 25 percent in 2012 rising to 5,000 units after increasing an estimated 12.5 percent by year-end 2011. In 2012, the forecast calls for 8 billion additional square feet of non-residential space, an increase of 14.3 percent. By comparison, nonresidential square footage is estimated to end the year at 7 billion, an increase of nearly 100 percent from 2010.
“We face an economy that is fundamentally sound, but has not been unleashed,” said Committee Member Dick Stevie, chief economist for Duke Energy. “Businesses are understandably taking a ‘wait-and-see’ approach.” Stevie cites several important factors affecting the rate of recovery in the coming year, including oil prices, the political atmosphere, the stability of the housing market and the trend toward hiring higher-skilled employees.
“If we see a reduction around oil prices and less uncertainty in the political atmosphere, we could seriously be underestimating the recovery in 2012,” said Stevie.
The 2012 Economic Outlook Conference was held October 18, 2011 at Cintas Center/ Schiff Conference Center at Xavier University.
Photos and audio of the event