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Monday, November 12, 2007

Federal Reserve Bank's View Of Cincinnati Economy: No New Jobs Being Created

CINCINNATTI (TDB) -- A fresh review of the Cincinnati-area economy shows a jobs market that has flatlined over the past year. The Federal Reserve Bank of Cleveland is reporting the nation's 25th largest metropolitan region -- which has about 2.1 million residents -- is stagnant compared to the nation as a whole. The complete text of the Cleveland Fed's report is here. (Or click the chart for some of the data.) The Fed says Cincinnati fared reasonably well during the early years of the Bush Administration as the region's jobs market expanded, but found that conditions have weakened markedly over the past 14 monhts.

The most dismal finding: Jobs in the service sector are not being created fast enough to replace those lost due to globalization and off-shoring as manufacturers shift production to China and other cheap-labor countries.

The Fed report makes clear that unemployment is rising in the Cincinnati area, and that new jobs aren't being added fast enough. Cincinnati may have escaped some of the harder knocks that have rattled other Midwestern cities because its manufacturing base shrunk slightly slower than the nation's -- down 16.7 percent compared to the USA's 17.4 percent drop. The Fed said it was nevertheless a "steep decline" in factory jobs.

"A year-over year employment growth comparison provides a snapshot of the employment situation from September 2006 to September 2007. During this period, the nation's total employment increased 1.2 percent, whereas Cincinnati's total employment was essentially flat, rising only 0.1 percent. The MSA (metropolitan statistical area) lost goods-producing jobs faster than the nation doe to particularly shop drops in manufacturing. Cincinnati's service sector added jobs at a much slower rate than the nation as a whole (0.5 percent versus 1.7 percent). This lack of job creation in the service sector has been at the heart of slow employment growth in Ohio's major cities. Cleveland (on the) Rocks, a recent Federal Reserve Bank of Cleveland Economic Commentary, looks at this issue in terms of Cleveland's employment growth."


  1. It would be interesting to rerun the analysis without Hamilton County. Leave a big hole in the center of the metro area, and the numbers would probably look pretty good.

    The County Data Center says we've been losing population for a long time now
    ( while almost every county surrounding us has gained people. Apparently this is a trend; because the only urban Ohio county that had a gain is the seat of state government. Perhaps that's a sign of what the real growth industry is.

    We remained unaffected by this for a long time because many of the folks fleeing to live elsewhere came back to Hamilton County every day for work, and on weekends to shop and be entertained. But as the County Report Card shows, sometime around 2000, the jobs started leaving too. Of course when that happens, the tax dollars go with them. Since then the cost of county government has risen steadily, while revenues have either been flat or gone down.

    Indeed, we now find ourselves in the midst of a budget crisis. County government is finally forced to cut its spending to match the drops in revenues and median household incomes.

    Meanwhile, if you cross the county line in any direction, you find explosive growth in population, jobs, infrastructure, and culture. It's pretty clear that these are inversely correlated with the deterioration of the urban core. In short, the benefits of being in the center of it all are no longer worth the substantial cost.

    It seems to me that if Hamilton County could just get its costs in line with its value, we could re-climb the growth curve, and the whole region would again look very attractive.

  2. Hi Mark --

    A fantastic comment.

    There has been debate under way for at least 40 years about the decline of cities like Detroit, Philly, Pitts, Cleveland -- and ,yes, even Cincinnati. They were in trouble before the economic changes that have accelerated this century.

    I really wonder about The Banks project. What pent up demand does it meet? How does it stimulate regional jobs growth? Is it a super-sized version of Tower Place several blocks closer to the Ohio River? I suspect that if there was no government subsidy there would be no Banks. I hope I am wrong.

    I wonder if economic development strategy should be focused on finding little things that will grow into big things. Should we be looking for kids in garages who are dreaming up the next Apple Computer Corp., or the aircraft industry like the Wrights? Or should we be building malls?

    I wonder if Cincinnati would be better off planting a thousand or so sycamore trees on the Banks, declaring it the greenest place on the Ohio River, and then transforming Over the Rhine into a Midwest version of Georgetown or Tribeca.