An economic recession did not occur in 2023, employment remains high, unemployment is low, inflation has eased, the stock market surged, Gross Domestic Product increased by an annualized 3.3% in the 4th quarter, and interest rate cuts by the Federal Reserve are anticipated this year.
“Interest rates coming down are a big deal and that will have a big impact on keeping the economy moving,” said Steve Staub, president of Staub Manufacturing Solutions in Dayton. “I know folks that have been looking at homes but decided to hold off due to the interest rates. Interest rates also greatly affect car and truck sales.”
The region’s 2024 economic outlook is positive, said Stephanie Keinath, vice president of strategic initiatives at the Dayton Area Chamber of Commerce and a member of the Dayton Daily News Community Advisory Board.
“Companies are generally feeling optimistic for the year ahead,” said Keinath, who anticipates continued strong employment growth. “We have some really incredible momentum underway in the Dayton region and across the state of Ohio.”
This newspaper interviewed 20 people from the business, real estate, economic development, government, social services, academic, performing arts and financial sectors about the Dayton/Springfield/Butler County region’s economic outlook for 2024.
“We are moving in an incredibly positive direction. Gas and food prices are declining, which is good for all citizens of Montgomery County. Lower interest rates will help those who need to borrow for a car or home,” said Montgomery County Administrator Michael Colbert. “There is high consumer demand, which is noted by our monthly sales tax reports. There is also high demand for workers, which is where some of our key initiatives lie within workforce development.”
There is widespread optimism among those interviewed that the region, state and nation are on track for a “soft landing,” meaning the battle against inflation won’t trigger an economic recession.
“A soft landing is better for longer term economic growth versus having any kind of mild recession. Overall, our economists are saying that it looks like the U.S. economy is moving toward slower growth, but no recession,” said David Melin, PNC regional president for Dayton. “In our region, we’re keeping a close eye on rising labor and health care costs, as well as raw material costs.”
If the economy does tip into recession, experts interviewed said it likely would be a mild one, but it would still cause some pain with higher unemployment and more challenges for businesses locally and across the state and nation.
The Dayton region and Ohio have a lot of manufacturing jobs, a sector that tends to see stronger impacts from recessions, but both also have many health care and education jobs, two sectors that are “relatively immune” to a recession, said Ben Ayers, senior economist at Nationwide Insurance in Columbus.
Ayers is leaning toward the possibility of a mild recession, with the current 3.7% U.S. unemployment rate possibly rising to 4.5% or 5% over the next 12-18 months, but he said there are plenty of reasons to be optimistic that a recession will not occur.
“Either way, you’re expecting a slowdown,” Ayers said. “You are expecting a slowdown in job growth, maybe some negative job growth. You’re looking at a slowdown in consumer spending. You’re looking at many businesses probably pulling in the reins a little bit too, because it is a lot more expensive to get a loan.”
Inflation picture brightens
The Consumer Price Index, which measures inflation, increased 3.4% year-over-year in December, far better than the CPI’s 9.1% year-over-year increase in June 2022 but still short of the Fed’s 2% target, according to the U.S. Bureau of Labor Statistics (BLS).
Average hourly earnings also increased in December, rising 4.1% year-over-year, giving families a bit of breathing room but also increasing businesses’ labor costs, which can drive up inflation.
The index of consumer sentiment is on the upswing too, rising by 21.4% year-over-year in January, with consumers demonstrating confidence about declining inflation and stronger income expectations, according to the University of Michigan Surveys of Consumers.
“We’re now getting to the point where inflation has slowed enough and wages continue to be quite positive and we are seeing positive wage growth,” Ayers said.
Jan Lepore-Jentleson said despite general optimism about the direction the economy is heading it is important to remember that the economy has widely differing impacts on people, depending on their circumstances.
“Wages certainly have gone up for our working families, but so have housing costs. It is a zero sum game for working class families,” said Lepore-Jentleson, executive director of East End Community Services in Dayton and a member of the Dayton Daily News Community Advisory Board. “People are still struggling with food and utility costs and gasoline and all of those things that have increased, but at a higher rate that their wages have.”
She said families also are challenged by the high cost of child care, transportation issues and the expiration of the expanded child tax credit that was put in place as part of COVID-19 relief but not renewed by Congress.
“It doesn’t take much to set a family back, like loss of a second income, because families are still on the edge,” Lepore-Jentleson said. “There is this disparity that seems to have gotten locked in.”
Families are at the heart of economic development efforts, said Julie Sullivan, executive vice president of regional development for the Dayton Development Coalition, which is the west region partner of the state’s privatized economic development arm, JobsOhio.
“It’s important to remember each of these jobs represents a person earning an income to support themselves and their family,” Sullivan said. “That’s truly the core of what we do and the most important impact we can have.”
Credit: Knack Video + Photo
Credit: Knack Video + Photo
Economic development efforts in the 12-county JobsOhio west region in 2023 netted 5,212 job commitments, 5,806 retained jobs, $383.28 million in new payroll and $1.07 billion in capital investment, according to DDC data.
“There’s also the economic impact of the job creation. We talk about that more with Wright-Patterson Air Force Base and its $17 billion worth of economic activity, but the same is true for private industry projects,” Sullivan said. “It increases the wealth circulating in the community, impacting service businesses like restaurants and retail, real estate, and increasing the local tax base.”
Economic wins for the region last year included the announcement that Joby Aviation Inc. will manufacture electric vertical take-off and landing aircraft at or near the Dayton International Airport and employ up to 2,000 people. Sierra Nevada Corp. is already at the airport and committed to 150 jobs once two aviation maintenance and overhaul hangars are fully operational, and could add 500 more if it wins new work it is bidding on.
The $9.5 million National Advanced Air Mobility Center of Excellence opened at the Springfield-Beckley Municipal Airport in 2023 and will support flight test and development of electric vertical take-off and landing aircraft and provide testing capacity to Wright-Patt’s Air Force Research Laboratory.
And construction began last year on Intel and Honda/LG Solution plants that are expected to draw workers and suppliers from the Dayton/Springfield/Butler County region. Intel’s $20 billion semiconductor plants near Columbus are expected to employ 3,000 people and another 2,200 jobs are anticipated at the $4.4 billion Honda/LG Solution electric vehicle battery plant in Fayette County.
“It is hard to overstate the impact of these economic wins for the Dayton region, and for Ohio as a whole,” Keinath said. “Not only do we have the immediate influx of jobs, but we also have the downstream investments that bolster our incredible small business ecosystem, especially for places like Dayton.”
Sullivan said these high-tech investments get “Dayton and Ohio on the map.”
“These wins give the region and the state a confidence boost and make us more attractive to both companies and job candidates,” Sullivan said “A vibrant economy attracts jobs. We want to keep this momentum going.”
Unemployment rates are low
Staub and others applaud the economic wins, but worry about the region’s ability to provide enough workers with the right skills for all the new jobs that are coming.
“We don’t have enough people to fill the jobs that we have,” Staub said.
Part of the problem is some working age people are still sitting on the sidelines. The labor force participation rate, which is the percentage of the civilian noninstitutional population 16 years and older that is working or actively looking for work, has not recovered to pre-pandemic levels in Ohio or nationally. In December the rate in Ohio was 61.9, compared to February 2020′s 63.5 rate, according to BLS data.
“While those (new companies) are nice wins for the region I am concerned for smaller local employers who will have to compete with those companies for talent. They will drive wages higher and make smaller companies less competitive,” said Doug Barry, owner of BarryStaff in Dayton. “The labor (force) participation rate needs to increase.”
Robust job growth combined with declining unemployment rates have been features of the economy as the country recovered from the 2020 COVID-19 pandemic shutdown that left 23.1 million people out of work in April 2020 and spiked the unemployment rate to 14.7%.
Job growth in Ohio was steady in 2023, increasing 1.8% year-over-year in November, according to non-seasonally adjusted non-farm employment data from the BLS. The region’s metropolitan statistical areas also saw job growth, with Springfield up 2.2%, Dayton 2% and jobs in the Cincinnati metro area, which includes Butler County, up 1.8% in November year-over-year.
The unemployment rate in the Springfield metro area was 3.3%, Dayton’s was 3.2% and the Cincinnati metro area was 3%. Ohio’s unemployment rate was 3%, the November data show.
“I think the region is in a great position with a lot of job creation moving from pipeline to reality,” said Jason Woodard, principal at Woodard Development, which is playing a major role in downtown Dayton development. “While there are always challenges that arise, I think the region should be very stable on the macro level with manufacturing and defense jobs leading the way.”
Kettering City Manager Matt Greeson said his economic development staff often visit with businesses.
“The news we’re hearing from them has been good. We are aware that a number of our larger businesses are planning expansion projects for later this year and we’re also seeing many entrepreneurs taking the dive and signing leases on spaces for restaurants and storefronts,” Greeson said.
Inflation, interest rate and pandemic impacts in 2023
Small businesses faced challenges in 2023, including high interest rates which led to a decline in microlending applications, and the impact of inflation on costs, said Whitney Barkley, director of the Greater West Dayton Incubator, which is part of the University of Dayton.
“I think last year was a really hard year for a lot of people. That was a consistent theme for clients,” Barkley said. “I think a lot of people are waiting to make strategic business moves because they are waiting to see what the economy is going to do.”
The arts and culture community was hit hard by the COVID-19 pandemic and still hasn’t fully recovered, said Patrick Nugent, president and CEO of the Dayton Performing Arts Alliance and a member of the Dayton Daily News Community Advisory Board.
Audiences are at 82% of pre-COVID levels and sales of ticket subscriptions packages are down 50% since the pandemic for the philharmonic, opera and ballet, said Nugent, adding that the alliance offers some $5 and free library tickets and is making subscriptions more flexible.
COVID-19 relief money and tax credits, which Nugent said “saved arts and culture” will be gone by the end of the year and he’s hoping that local businesses and government will step up to help.
The recent Arts & Economic Prosperity study found $239 million of economic activity in Montgomery, Miami, Clark and Greene counties stemmed from investment in arts and culture and 4,490 local jobs are impacted by arts and culture, according to a presentation hosted by by Culture Works on Jan. 23.
Keinath said helping businesses and the wider community share in more inclusive economic growth is a big focus for 2024 and beyond.
“We have some incredible work happening in the Dayton region to ensure that the economic opportunities that are coming down the pipeline are accessible to our whole community, not just a portion of our community. And we need to build upon that work,” Keinath said. “This is work that addresses affordable housing shortages, child care shortages and transportation challenges. This is the work that focuses on strengthening our educational pipelines.”
“This work is not the ‘easy stuff,’ but it is absolutely critical that we move the needle if we’re to see truly inclusive economic growth.”
U.S. Economic Indicators – December 2023
Unemployment rate - 3.7%
Unemployed people - 6.3 million
Employed people - 157.2 million
Employment change - Increased by 216,000 from November
Labor force participation rate - 62.5%
Average hourly earnings - Increased 4.1% year-over-year
Consumer Price Index - Increased 3.4% year-over-year
Retail sales - Increased 5.6% year-over-year.
Gross Domestic Product - 4th Quarter increased 3.3% year-over-year
Note: CPI data is not seasonally adjusted. Employment, unemployment and retail sales data is seasonally adjusted. Employment is non-farm employment.
Sources: U.S. Bureau of Labor Statistics, U.S. Bureau of Economic Analysis, U.S. Census Bureau
|Ben Ayers, senior economist at Nationwide Insurance
|Whitney Barkley, director of the Greater West Dayton Incubator
|Doug Barry, owner of BarryStaff
|Itzhak Ben-David, professor of finance at Ohio State University
|Michael Colbert, Montgomery County administrator
|Dave Dickerson, president-business development at Miller-Valentine Construction
|Levi Duncan, owner and CEO of Liberty Remodeling in Springfield
|Tom Franzen, Springfield assistant city manager and director of development
|Matt Greeson, Kettering city manager
|Jody Gunderson, Hamilton director of economic development
|Stephanie Keinath, vice president of strategic initiatives at Dayton Area Chamber of Commerce
|Jan Lepore-Jentleson, executive director of East End Community Services
|Kelly McCormick, president of Dayton Realtors
|David Melin, PNC regional president for Dayton
|Lisha Morlan, Middletown assistant director of economic development
|Patrick Nugent, president and CEO of the Dayton Performing Arts Alliance
|Steve Staub, president of Staub Manufacturing Solutions in Dayton
|Julie Sullivan, executive vice president of regional development at Dayton Development Coalition
|Kevin Willardsen, associate professor of economics at Wright State University
|Jason Woodard, principal at Woodard Development
SEE THE STORIES IN THIS SERIES
Dayton and surrounding region economic outlook is strong for 2024
New jobs, tight labor market keep workforce at top of region’s priorities in 2024
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