Dayton Metropolitan

Economy in Context

Richard Stock, PhD.Business Research Group

University of Dayton

State of the Dayton Metro Area(in December Each Year, 2000-2014)

• Dayton lost 32,400 jobs in the two year period from December, 2007 to December, 2009.

• It has recovered 12,900 of those jobs in the last five years

443.1

404.7

372.3

385.2

320

340

360

380

400

420

440

460

Employment (in 000s)

State of the Dayton Metro Area: Last 4 Years(in December Each Year, 2009-2014)

• Growth was steady in the December 2009 to December 2012 period.

• Stagnation in 2013 and early 2014 has been reversed in last few months

372.3

376

380.2 380.8

376.4

385.2

365

370

375

380

385

390

Employment (in 000s)

Total Employment Index: Dayton and Cincinnati Metros compared to Ohio and the United States, Dec. 2000-2014

Manufacturing Employment Index: Dayton and Cincinnati Metros compared to Ohio and the U.S., Dec. 2000-2014

Wholesale Employment Index: Dayton and Cincinnati Metros compared to Ohio and the U.S., Dec. 2000-2014

Retail Employment Index: Dayton and Cincinnati Metros compared to Ohio and the U.S., Dec. 2000-2014

Transportation and Utilities Employment Index: Dayton and Cincinnati Metros compared to Ohio and the United States,

December 2000-2014

Information Employment Index: Dayton and Cincinnati Metros compared to Ohio and the United States, December 2000-2014

Financial Activities Employment Index: Dayton and Cincinnati Metros compared to Ohio and the United States, December 2000-

2014

Prof. & Bus. Serv. Employment Index: Dayton and Cincinnati Metros compared to Ohio and the United States, December 2000-

2014

Education & Health Services Employment Index: Dayton and Cincinnati Metros compared to Ohio and the United States,

December 2000-2014

Health Services & Social Assistance Employment Index: Dayton and Cincinnati Metros compared to Ohio and the United States,

December 2000-2014

Leisure & Hospitality Employment Index: Dayton and Cincinnati Metros compared to Ohio and the United States, December 2000-

2014

Government Employment Index: Dayton and Cincinnati Metros compared to Ohio and the United States, December 2000-2014

Federal Govt. Employment Index: Dayton and Cincinnati Metros compared to Ohio and the United States, December 2000-2014

Local Govt. Employment Index: Dayton and Cincinnati Metros compared to Ohio and the United States, December 2000-2014

The Income Piece

Average Weekly Earnings in Dayton and Cincinnati relative to Ohio and U.S., December 2007-2014 (2014 Constant Dollars)

Relationship to National Economy

Cyclical factors

• How closely linked is the Dayton Economy to the National Economy?

• From January, 2004 to December, 2014, 92% of variation in monthly Dayton Metro Area unemployment rate can be explained by variation in the U.S unemployment rate

United States, Dayton Metropolitan Area Monthly Unemployment Rates, January 2004-December 2014

United States, Dayton Metropolitan Area Monthly Unemployment Rates, September 2007-December 2014

Number of Unemployed in Dayton Metropolitan Areas, 1990-December 2014

From the height of unemployment, 33,949 fewer people unemployed but 20,129 fewer in work force than in Jan 2010 and only 13,820 more jobs

Forecasting the Next 3 years• Note that the Dayton Metropolitan Areas has

mirrored the Country as a whole closely in the last few years.

• What are the implications of the National Economic Forecast?

• Federal Government and Local Employment Declines Have Already Taken a Toll. Are we done?

Survey of Professional Forecasters, Philadelphia Federal Reserve Bank (1rd Quarter Estimates)

Unemployment Rate (%)

CPI Inflation Rate (%)Real GDP (%)

Headline CoreQuarterly data:

2015:Q1 2.7 5.6 -1.4 1.32015:Q2 3.0 5.5 1.6 1.72015:Q3 2.8 5.4 1.9 1.82015:Q4 2.8 5.2 2.0 1.82016:Q1 2.9 5.2 2.1 1.9

Annual average data: 2015 3.2 5.4 1.1 1.72016 2.9 5.1 2.1 1.92017 2.7 5.0 2.3 2.12018 2.7 4.9

Implications of National Forecast for the Dayton Metropolitan Economy

United States Dayton Metro

Real GDP (%)Unemployment

RateUnemployment

RateNumber of

Unemployed

Quarterly data: 2015:Q1 2.7 5.6 4.5 17,7002015:Q2 3.0 5.5 4.5 17,7002015:Q3 2.8 5.4 4.5 17,7002015:Q4 2.8 5.2 4.4 17,1002016:Q1 2.9 5.2 4.4 17,100

Annual average data: 2015 3.2 5.4 4.5 17,6002016 2.9 5.1 4.3 16,5002017 2.7 5.0 4.3 16,5002018 2.7 4.9 4.2 15,900

Defense Budget Constraints• Number of Jobs Linked to Wright Patterson Air Force Base

Activities ~ 25,000 to 30,000• Cuts are likely to be program specific for particular big ticket

items, but there has already been an impact locally at Federal Government and Professional and Technical Service employment level.

• A Republican Congress is NO Guarantee of a loosening in Defense Budget constraints.

• Assuming a 10% drop in WPAFB related employment over a 3 to 4 year period, that implies 2500 to 3000 fewer jobs or an annual impact of about a 1000 jobs.

• It continues to represents a head wind on local job growth

The Good News

• Fuyao Glass +1000, Early 2015• Prologis P&G Distribution Center, +800 Early

2015• Emerson Climate Technologies Innovation

Center +50 End of 2015

Summary• The local economy’s rebound stalled out over 2013 and early

2014 due to declines in defense related professional and technical services employment BUT NOW

• Encouraging trends in Manufacturing, Transportation/Utilities, Professional & Business Services, Health Care and Gov’t Employment

• The unemployment rate remains below National Rates because of continued decline in the Civilian Labor Force

• Defense spending cuts will continue to create problems for WPAFB associated work.

• Job Growth may accelerate due to maturing economic development projects