November 30, 2010
2011 economic outlook: glass half full
For the third year in a row, the Cincinnati USA Regional Chamber, its economic development arm, the Cincinnati USA Partnership, and the Northern Kentucky Chamber of Commerce jointly released the area’s economic forecast. This year, the report was unveiled before a crowd of more than 300 at the Northern Kentucky Convention Center in late October.
The Cincinnati USA Partnership’s Regional Economic Advisory Committee produced the 2011 Regional Economic Outlook. Committee member David Hehman, president & CEO, Federal Home Loan Bank of Cincinnati, presented the national outlook, while committee member Janet Harrah, senior director, Center for Economic Analysis & Development, Northern Kentucky University, presented the regional outlook.
Last year’s forecast called for a modest improvement for 2010, which the committee confirmed has taken place. The forecast for 2011 again calls for slow, but steady, improvement. Harrah cautioned that better does not automatically equate to good, but to find the good in the local economy means looking at the glass a half full, not half empty.
And while the committee agrees that the recession is officially over, the recovery has yet to gain much steam. For most consumers, recessions are measured by conditions in the labor market—and the regional unemployment rate continues to be high. The unemployment rate last year averaged 9.3 percent and is on track to average 9.9 percent this year, with the forecast calling for the unemployment rate next year to remain relatively high at 9.4 percent.
So the improvement, and the glass being half full, is in the substantial slowdown in the pace of job losses.
In 2009, the metro area lost 47,800 private-sector jobs. This year, Cincinnati USA is estimated to have a net loss of 3,800 private-sector jobs. The total number of jobs is on track to decrease 0.5 percent this year and the forecast calls for the total number of jobs to increase in 2011 by 1.1 percent.
The second area of the glass being half full is found in the turnaround in the manufacturing sector.
In 2009, the number of manufacturing jobs reduced by more than 10 percent. In 2010, the Cincinnati manufacturing sector is on track to see manufacturing jobs increase by 1.5 percent. The forecast calls for a second year of net job growth in the manufacturing sector with an increase of 1 percent.
The local labor market is the third area of improvement, with an increase in the number of hours worked and the earnings.
Among other encouraging highlights:
- Gross Regional Product (GRP) is expected to increase 2.9 percent in 2011, matching the predicted increase nationally. That’s slightly higher than this year’s estimated rate of 2.7 percent GRP growth.
- The total number of jobs will grow by 1.1 percent to nearly 1.15 million.
- The region's construction and real estate industries will pick up slightly, with a prediction of building 5,400 new homes and 4.2 billion in additional square feet of commercial space. That compares with just more than 4,000 homes and 3.8 billion square feet of space this year.
So the bottom line is that while the economy is recovering, it will take some time to fully recover.
The other members of the committee include: Richard Stevie, chairman of the committee and chief economist for Duke Energy; Brian Richard, operations vice president for economics and sales forecasting at Macy’s; George Vredeveld, director of the Economics Center for Education & Research at the University of Cincinnati; and Gary Wright, president of Wright Futures.
Download the complete 2011 Regional Economic Outlook