Valley Economy Improves, Still Lags National Pace
BOARDMAN, Ohio -- While the Youngstown Metropolitan Statistical Area economy is recovering from the Great Recession, its rate of recovery is slower than the U.S. economy, a senior regional analyst with the Federal Reserve Bank of Cleveland said here Tuesday.
The analyst, Guhan Venkatu is a vice president at the Pittsburgh branch of Cleveland Fed and he offered his findings to the Youngstown/Warren Regional Chamber at Mr. Anthony’s.
“We've actually seen growth in the Youngstown economy and the Youngstown metro area over the last year, if we go June [2013] to June [2014]. We see growth here, but it's much less growth than we'd see nationally,” Venkatu said. “It's a little under 0.5% [in Youngstown], whereas nationally it's closer to about 2% over that period.”
Several economic sectors, including construction mining and manufacturing, have experienced declines in the past year, but those losses have been counteracted by a large increase in the professional services sector, the economist said.
“[The losses are] being balanced out, although not entirely, by improvements in professional and business services. That latter category has some spillover from shale-related activities, so that could be one of the things that's supporting employment growth here in the Mahoning Valley,” Venkatu said.
During the Great Recession, the rates of unemployment in the Youngstown MSA -- Mahoning and Trumbull counties in Ohio and Mercer County, Pa. -- were well above the national average, Venkatu said. The rates now match the national average of just above 6%, but that figure can be “misleading," he noted.
“You have the unemployment rate getting back to roughly where it was in December 2007, but a lot of the decline we've seen from the sharp unemployment increase, a lot of that 5% decline has actually been the result of a decline in the labor force as opposed to a rise in employment,” he explained.
Venkatu presented three studies on the future of the oil and gas industry.
“There are reasons to be excited, but the question is, how excited?” he said. “You can either be a little excited or a lot excited. They all vary quite considerably.”
One study, performed by Kleinhenz & Associates of Cleveland, projected 204,000 jobs created directly and indirectly by 2015 with an economic impact of $22 billion. An Ohio State University study places the impact at near 20,000 jobs and $14 billion by next year.
“They [Ohio State] are trying to measure those things more directly, essentially using evidence from across the [Pennsylvania] border. The employment effects they find are fairly limited in that case but the income effects seem to be a little more modestly positive,” Venkatu said.
The Fed officer noted that not all jobs that have accompanied the expansion of the shale industry will be permanent, pointing to the automation of some processes once drilling is complete. The increased emphasis on manufacturing innovations, namely America Makes, has the potential to create permanent jobs that will accelerate the pace of economic recovery in the Mahoning Valley, he observed.
“When you look at the Youngstown, I think there are reasons to be optimistic but there are reasons to put that in context. When you slice the data in particular ways, you get sort of an idea of some of the challenges that communities like Youngstown and Midwestern manufacturing-oriented areas … continue to face,” he said. “There's a legacy element to that.”
Copyright 2014 The Business Journal, Youngstown, Ohio.
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