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St. Louis Post-Dispatch: Recession, smession? Signs point toward continued, but slowing, economic growth in Ohio as White House changes hands
NTMA featured in St. Louis Post-Dispatch article.
Saturday, January 14, 2017
Courtney Wagner likes what she sees at her family-owned machine and tool shop off Wooster Road West in Norton.
Business is good and they are investing in new equipment, she said. She’s president of Wagner Machine Inc., the third generation member of her family running the business that was founded by her grandfather.
Wagner Machine says it can mill and turn metal pieces as small as a thumbtack and fabricate parts that weigh as much as 30,000 pounds.
Wagner also is president of the Akron chapter of the National Tooling and Machining Association, largely made of smaller suppliers to the auto, rubber/polymer, energy and other industries.
Think of Wagner Machine and related companies as leading economic indicators; when they get orders, that means their customers — larger firms further up the manufacturing food chain — expect increased business. And that means dollars come in, creating and retaining jobs.
“We see things six to eight weeks before they’re needed,” Wagner said. “Our association is very optimistic for this year.”
The optimism comes as billionaire Donald Trump prepares to take the oath of office Friday as the next U.S. president. Trump, nominated by Republicans at their convention in Cleveland last July, was elected in November after an economy-focused campaign promising to “Make America Great Again.”
But some see economic storm clouds ahead. Gov. John Kasich, one of Trump’s opponents for the nomination, warned in early December that lower-than-expected state tax revenue could be an indication of trouble ahead for Ohio.
“We’re on the verge of a recession in our state,” Kasich said in a visit to the Ohio House.
Since the governor’s remarks, though, state budget figures released this past week paint a still struggling but bit more optimistic outlook — at least for the near term.
Nationally, some fret that the long, yet historically weak, U.S. economic expansion since the end of the Great Recession could come to an end soon, too.
Still, it is difficult to make predictions, especially about the future — a saying attributed to the late Yogi Berra, Mark Twain, Albert Einstein and Danish physicist Niels Bohr. Take your pick.
Joe Savarise, for one, thinks his industry — he’s head of the Ohio Hotel & Lodging Association — should have a decent 2017.
“The growth of the hotel market in Ohio has been strong and continues to be so going into 2017,” he said. “This is a reflection of performance of the industry overall, and a basically sound underlying economy. We are still in a building/expansion phase, and we see that around Ohio and in the Akron market as well. While state sales tax receipts declined for some sectors of the economy, sales tax collections for industries related to travel and tourism increased 2.6 percent in 2016. The travel sector traditionally leads the way to economic recovery and growth.”
New hotels will continue to be built this year in the state and new hotel brands will also come to Ohio, he said.
“All of this growth has a positive impact on the economy of the entire state,” Savarise said. “Hotel development leads to additional growth in retail, restaurant and other businesses in the immediate vicinity. Across the state, more than 420,000 jobs are supported by travel and tourism — it’s big business.”
Ohio jobs are expected to increase this year, said Joel Elvery, economist at the Federal Reserve Bank of Cleveland. In addition, wages continue to increase, he said.
“[But] growth in Ohio is going to slow compared to 2015 and 2016,” he said.
An imminent state recession is unlikely based on broader economic indicators than state tax revenue, he said. For one thing, state sales tax collection is being hurt as consumers shift to online, not brick and mortar, shopping, he said. Ohio doesn’t capture all of the taxes from online sales the way it does with in-state store sales, Elvery said.
Ohio’s demographics also work against strong economic growth; the state’s aging population is not being offset with enough young people to replace retired workers, he said.
Ohio manufacturers also are upgrading their technology and increasingly automating, which improves productivity but results in fewer jobs, he said. “There’s no sign that will let up,” Elvery said.
(Read more here.)