Earlier this year at the World Economic Forum in Davos, Switzerland, Ohio Gov. John Kasich noted that the state is on the brink of an "Ohio miracle" with, as reported in the Columbus Dispatch, "the confluence of the closing of an $8 billion budget deficit in 2011, a jobs sector that's growing and a predicted $1 billion surplus for the state by June 30."
Sustaining this pattern may be tempered by continuing weak job growth, based on an analysis of the region's growth in 2013 and the regional growth forecast for 2014, done by Mark Partridge, Ohio State University's C. William Swank Chair in Rural-Urban Policy.
"I expect the U.S. economy will continue to modestly expand in 2014 and avoid problems due to fiscal contraction and Europe," he says. "The U.S. performance looks much better when compared to other advanced economies around the globe."
Partridge says that although the national economy has been recovering, this growth has tended to be restrained and is not likely to speed up until we see national productivity increases driven by innovation.
He also offers policymakers an economic forecast for the state of Ohio. From a state perspective, Partridge noted that though job growth in Ohio has seen an uptick since 2009 as well, growth in the state has lagged the national average by about four percentage points since January 2007.
"The long-term pattern of Ohio lagging the nation by about 0.5 to 1.0 percentage points a year appears to have reasserted itself," Partridge says. "The long-term pattern of Ohio lagging Illinois, Indiana and Wisconsin in the region, while leading Michigan, has also reasserted itself."
Partridge says the concept of growth driven by a manufacturing renaissance is also questionable. Although the share of national GDP driven by manufacturing has remained constant since the 1940s, manufacturing's employment share has fallen over time and will continue to fall into 2014.
"Unlike total employment, manufacturing's employment has far from recovered from pre-recession levels in the U.S. and Ohio," he says. "In terms of jobs, manufacturing of today employs very few people."
He offers the following conclusions:
• I expect the US economy will continue to modestly expand in 2014 and avoid problems due to fiscal contraction and Europe.
• I think Ohio will trail the US average, which is consistent with historical perspective.
• Growth will be strongly supported by ongoing recovery in housing.
• The new normal is growth will be more restrained until we have a productivity increases -- probably due to innovation.
• US performance looks much better when compared to other advanced economies.
• Another strength of the U.S. and Ohio economies is the broad-based nature of their recoveries that do not rely on the strength of single industries.
• Yet, stories of a manufacturing renascence are premature.
Source: OSU Extension