“It’s too soon to judge from preliminary data, but if these numbers hold, it could be a sign that efforts by the Federal Reserve to reduce inflation could be pushing Ohio into a recession,” said Michael Shields, a researcher with Policy Matters Ohio. “The Fed should slow or pause interest rate hikes until Ohio and all states have recovered the jobs they lost to COVID-19.”
Some experts point out that the region saw significant job declines around this time last year, arguing that seasonality could be a factor in the data.
Richard Stock, director of the Business Research Group at the University of Dayton, said the seasonality adjustment is based on the last 10 years, and last year the region had a similar jobs decline from August to September. But those numbers surged back in October 2021, looking at the non-seasonally adjusted data, according to Stock.
According to the preliminary, seasonally adjusted data from the U.S. Bureau of Labor Statistics, Dayton metro area employers slashed 2,000 jobs in September, which represented a 0.5% reduction in local employment.
That would be the largest local job loss since April 2020, when the region saw a shocking 58,900 jobs erased as a result of COVID-related disruptions and lockdowns.
“The real problem is in the seasonal adjustment,” Stock said. “BLS has spent time trying to correct for COVID effects, but the corrections themselves could be problematic,” he said.
Stock said there is strong evidence the labor market is tightening due to a decline in the civilian labor force. While cautioning about margins of error in the data, he said it “doesn’t make sense to talk about a recession” given that the unemployment rate locally has fallen from 4.3% to 3.8%.
In the 29 months since April 2020, the Dayton metro area has recorded job gains in 19 months; lost jobs in eight of those months; and saw no change in employment twice, according to the bureau’s data.
The metro area consists of Montgomery, Miami and Greene counties.
The bureau’s September data, like all monthly jobs data, is preliminary and is subject to revision next month. It’s possible the job losses are not as substantial as they initially appear.
The September BLS data said the only Ohio metro area that saw a larger job decrease than Dayton was Youngstown (-0.7%).
Except for March and April of 2020 — at the very start of the coronavirus crisis — the Dayton region hasn’t seen an employment decline of this size since the summer of 2012, bureau data show.
At the state level, Ohio lost about 7,600 jobs last month, which was the first employment reduction since October 2021.
Ohio’s unemployment rate last month remained flat at 4%, but there was a drop in the labor force participation rate, which means some Ohioans left the workforce, said Rea Hederman Jr., vice president of policy with the conservative-leaning Buckeye Institute.
Recession fears are growing because of high interest rates, higher energy costs and supply chain disruptions, Hederman said.
Ohio’s job loss could signal that the state’s recovery from the COVID recession is starting to falter, said liberal-leaning Policy Matters Ohio.
The Federal Reserve’s rate-hike policies aimed at stamping out inflation could increase unemployment, costing about 1.5 million Americans their jobs, the organization said, citing some estimates.
The Fed’s rate hikes can lead to higher unemployment because they lower demand, with businesses facing higher borrowing costs and consumers and businesses cutting back on spending.
Fed Chairman Jerome Powell last month said that unemployment still remains near a 50-year low, and job vacancies remain near historical highs.
Higher interest rates, slower growth and a softening labor market could be painful, but they are not as troubling as what will happen if price stability is not restored, he said.
Shields, with Policy Matters Ohio, cautioned against reading too much into preliminary jobs numbers for a single month, because they will be revised for better accuracy.
But the latest numbers could be a sign that employers are beginning to cut jobs in response to efforts by the Federal Reserve to slow the economy as a way to reduce inflation, he said.
“While inflation is a real concern, making it harder for low- and middle-income Ohioans to cover basic needs, I see a recession as far more dangerous to Ohio,” Shields said. “We are still missing over 133,000 jobs lost to COVID-19, and Ohio has been slow to recover from recent recessions.”
Shields said it took more than seven years to recover from the Great Recession, and Ohio never regained all the jobs lost in the recession of the early 2000s.
He said corporate profits account for a historic share of the cost of inflation — more than 40% — and corporations are using the pandemic and the war in Ukraine to raise prices.
Many people say the Dayton metro area’s economy is largely “eds, meds and feds,” which refers to jobs in education, health care and government, said Monica Jones, Dayton’s director of procurement, management and budget.
Education and health services account for about 18% of total local employment, while government accounts for about 16% of local jobs.
Trade, transportation and utilities is another major industry (17% of local jobs), while about 11% of local workers are employed in manufacturing.
In the last year, Dayton has seen job losses in financial activities (-1.7%), education and health services (-0.7%) and trade, transportation and utilities (-0.3%), according to non-seasonally adjusted survey data.
Overall, local employment is still up more than 1.5%, year-over-year.
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