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Thursday, January 10, 2008

Ohio's January Financial Report: Strickland Aides See 'Imminent Recession'

COLUMBUS (TDB) -- The monthly financial report that landed on Gov. Ted Strickland's desk sees minimal economic growth for the next six months and calls rising U.S. unemployment "a serious warning of imminent recession." It is a largely gloomy report that noted the state has been holding its own financially, with overall tax collections about $118 million less than projected in the current budget. However, there is little room for growth or new programs. Reading between the lines, there could be spending cuts if tax receipts go south.

Overall, Ohio seems certain to be buffeted if the economy declines. State Budget Director J.Pari Sabety delivered the 28-page economic summary:

"The trend of employment in Ohio remains flat, but the jump in the U.S. unemployment rate to 5.0% in December is a serious warning of imminent recession. Personal income growth is currently sufficient to support to moderate growth in consumer spending, but a further downtown in employment would likely lead to declines in both income and spending. The outlook remains highly uncertain. At the same time, however, the message of the leading economic indicators is more negative than it has been since the 2001 recession."

Sabety's memo to the governor noted that GDP growth is expected to be at about 2.2% in the fourth quarter and is "viewed as only the beginning of a serious slowdown."

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