Ohio’s monthly budget report is nothing but terrible news, with many economic indicators at their lowest point in generations.
Income tax revenues in April fell 50% below estimates, auto sales taxes are off by 57%, and other sales tax revenues nearly 18% below estimates. That trifecta amounts to a $872.4 million drop in tax revenues to the state.
Another concerning economic indicator: another 140,000 Ohioans enrolled in Medicaid in April, bumping up the total to 3 million.
Confidence among business leaders, small business owners and consumers is down.
Housing sales or new and existing homes in the Midwest decreased 1.6% and 4.3%, respectively. "The loss of jobs, heightened uncertainty created by the pandemic, and the logistical obstacles to home search and purchase have begun to take a toll," the budget report says.
“Manufacturing production decreased by 6.3%, the 12th largest monthly decline in the more than 100-year record,” the report says. Manufacturing saw declines in March in autos and auto parts, durable goods, furniture, fabricated metal and other items.
Spending on personal consumption decreased in March by 7.5%, the largest drop on record dating back to 1959. Americans are spending less on motor vehicles, household equipment, recreation, restaurants, hotels and transportation.
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Not only have more than 1 million Ohioans filed for jobless benefits, other numbers show big trouble in the labor market:
• Just 60.2% of Americans are participating in the labor pool — the lowest since 1973.
• The employment-to-population ratio fell to 51.3% — the lowest since 1948.
• The number of hours worked fell by nearly 15% in April — the biggest monthly drop and the lowest level since 1964.
Tobacco tax revenues are $14 million higher than estimates — the only part of Ohio’s monthly budget report that’s in the black.
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Economic experts are uncertain about how and when the economy will return to its pre-pandemic levels. One thing they agree on is that it won’t be any time soon.
The economic recovery scenarios could fall into five categories. Plotted on a graph, they’d look like the letters V, U, W, L or a ‘Nike swoosh.’
The V-shaped model predicts economic recovery will quickly return to normal once stay-at-home orders are lifted, and factories and services reopen smoothly.
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The U-shape predicts that recovery will take longer while the W-shape predicts multiple rounds of business closures in response to new surges of coronavirus cases. The L-shape is the most pessimistic, suggesting a long, slow recovery marked by a spiral of bankruptcies.
“There are still too many unknowns about the coronavirus pandemic today to accurately predict the shape of the economic recovery. Without a vaccine or major improvements in the treatment, economic activity is unlikely to return to its pre-pandemic baseline quickly,” the budget report says.
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