Wall Street Sees Ohio's Bond Rating As Stable: More 'Third Frontier' Paper Headed To Financial Markets

COLUMBUS (TDB) -- So far, the entire project has created less than 6,000 jobs in six years. There has not yet been a home run. Now the state plans to sell another $40 million worth of bonds in early August to finance Third Frontier projects that are supposed to push and shove Ohio's economy into a high-tech future. Fitch Ratings graded the bonds "AA+" today, which means they are going to market considered solid investments. And it praised Democratic Gov. Ted Strickland and the GOP-controlled legislature for steady financial management in a time when the state economy is tanking. The Third Frontier is former Gov. Bob Taft's $500 million brainchild -- since 2002 it has created about 5,600 jobs.

Meanwhile, Wall Street's take on Ohio's economy, as delivered by Fitch, is quite gloomy. It did note the state's top political leadership has so far remained "conservative in response to economic weakening" -- meaning Strickland & Co. have been penny pinching and prudent managers of Ohio's budget. Still, there are dark clouds and Ohio has not turned around:

"Ohio's economic performance remains weak, with persistent declines in manufacturing now joined by decelerating service sector employment and a continued deep housing market downturn. Since the last recession, employment growth has been limited, rising 0.5% from 2004 to 2007, compared to U.S. growth of 5.9% over the same period. Total employment in 2007 fell 0.2% year-over-year, compared to a 1.1% increase nationwide. June employment is down 0.3% year-over-year, dragged down by job losses in manufacturing and construction, while services growth remains weak. Personal income, though growing, continues to underperform comparable national figures: Personal income rose 4.7% in Ohio in 2007 vs. 6.2% nationally; first quarter 2008 personal income rose 3% vs. 4.8% nationally."

Ohio Gov. Ted Strickland: Worries A Delta Airlines Merger Impacts 130,000 Cincy Area Jobs

CINCINNATI (TDB) -- With merger talk now in the air between Delta Airlines -- which has an international hub at Cincinnati/Northern Kentucky Airport -- and two rivals, the timing seems right for Gov. Ted Strickland to start worrying about preserving local jobs. Strickland and Lt. Gov. Lee Fisher, who heads the Ohio Department of Development, sent a joint letter to Delta CEO Richard Anderson pledging "our assistance to ensure the future viability of your operations in our region." They said they would deliver a financial aid package to keep Delta if necessary.

Delta reportedly has been discussing a merger with Northwest Airlines, which has a major hub in Detroit, and United Airlines, which has its largest base in Chicago. Any link up is seen threatening Delta's Cincinnati-area operations, which analysts consider vulnerable because both partners are Midwestern giants (Northwest is headquartered in Minneapolis; United in Chicago). Delta is a southern company with its headquarters and main hub in Atlanta. Gov. Strickland said he and Fisher want a meeting with the Delta CEO to find out what is up, and to learn what they can offer.

"The State of Ohio is committed to the future of the Delta hub, as well as over 130,000 jobs in the region that are an outgrowth of this prominent operation. We would appreciate the opportunity to meet with you to discuss how the economic success of our region is intrinsically tied to the growth and success of Delta Airlines. As you are aware, the Cincinnati/Northern Kentucky hub is one of the ten largest hubs in the country and maintains the positions of Delta's second largest hub."

Strickland noted that more than 300 foreign-owned companies now operate in SW Ohio/Northern Kentucky, and 1,000 other businesses are involved in foreign trade. Those companies might suffer if access to flights are trimmed -- or they might look to move to other locations . Strickland and Fisher also pointed out that Cincinnati ranks as the USA's 22nd largest region as an exporter of products in the global economy. A link to the letter is available here courtesy of Cincinnati.com. Strickland's office had not yet posted a copy on the State of Ohio's online portal.

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."

Cleveland Fed Reserve Chief: Ohio Not Losing Jobs 'Faster' Than U.S. As A Whole

CLEVELAND (TDB) -- Ohio's economy is losing jobs at the rate of 300,000 every quarter and somehow manages to replace them all. So says Cleveland Fed Chief Susan Pianalto, who contends the state's difficulty is "not unusually high job destruction," but slow overall growth. Pianalto says the state must create a business climate that embraces education and innovation to solve long-term structural issues that have caused accelerating economic decline.

Pianalto blames neither globalization nor foreign trade agreements like NAFTA for Ohio's lackluster economic performance. The state once had the nation's 5th largest economy among the 50 states; today it is 7th. The Cleveland fed chief says there simply has not been enough new business formation to pick up the slack.

"The dynamics of creative destruction play out across almost all sectors of our economy. The churning of firms also creates a churning in labor markets. Here in Ohio, we have roughly 5.5 milion workers. In each quarter of the year, roughly 300,000 jobs are destroyed, but in each quarter, roughly 300,000 new jobs are created.

"But even with all of this churning, Ohio's labor market it less dynamic than the nation as a whole. That is, at the national level, roughly 7 percent more jobs are created each quarter than are lost. Many Ohioans tend to blame our weaker employment growth on the job losses in our traditional manufacturing industries. However, Ohio is not losing jobs at a faster rate than the rest of the country. Our problem is not unsually high job destruction. Instead, it is our weak job creation, especially in the number of jobs created through new business formation."

Negative Jolt For Ohio Economy: GM's Volt To Be Built In Michigan

CINCINNNATI (TDB) -- The Detroit Free Press is reporting the new UAW/GM labor pact has driven a stake through the heart of Ohio's hopes for landing the new Chevy Volt electric car for Lordstown's manufacturing complex. More on the story from Crain's Detroit Business.

Up until this weekened, there were a steady stream of hopeful but unconfirmed reports since Spring that the Volt would roll off assembly lines in Ohio around 2010. Even Lordstown officials had said they heard whispers the Volt was coming to Ohio. Instead, it appears certain that GM is going to produce the new vehicle -- which is supposed to position to the automotive giant for a green, less petrol-dependent economy -- in Hamtramck, an old manufacturing community that is completely within Detroit's city limits. GM has a plant that assembles Cadillacs and other large models there now.

AutoBlogGreen has more and says GM loves Detroit, its hometown.

Cincy Enquirer Gives Ken Blackwell's Railroad Rant A Ride

CINCINNATI (TDB) -- Republican Ken Blackwell, now a fellow at a conservative think tank in Ohio, received a big chunk of space in today's Cincinnati Enquirer for a column that sounded like he was blowing the whistle on a scam to suck jobs out of Ohio. But the attack on a huge federal loan for a small South Dakota railroad was really about tooting his own horn. The headline over the Blackwell piece: "Midwest doesn't need to be railroaded."

But there was no fresh news about the project. It was killed earlier this week by the Federal Railroad Administration, an action that neither Blackwell nor the newspaper seemed care about during years of wrangling in Washington that led up to the decision. If any stories were published, they don't stand out. Meanwhile, Blackwell is fresh off a losing campaign for governor of Ohio and the railroad loan he is now so steamed about as wasting tax money and threatening Ohio jobs did not emerge as a significant issue in that race. In today's Enquirer column, Blackwell wrote, "Continued government funding of this small railroad company would have embodied one of the most disturbing examples of government waste in recent memory."

Who knew?

The Enquirer ALLOWED Blackwell and his co-author, Capitol University Law Professor Brad Smith, to rail that the project was a serious threat to Ohio and would throw Ohioans out of work. "To those in Ohio and other parts of the economically struggling and coal producing Midwest, it would have represented something equally upsetting: government interference with free market forces in order to fund the competition. Ohio is coal rich and is developing new methods to burn the resource cleanly and efficiently. Giving the DM&E tax dollars to flood the Midwest with subsidized Wyoming and Montana coal would have set back Ohio's clean-burning coal initiatives. By underwriting the transportation costs of those competing with Ohio coal producers, the loan would have cost the Midwest jobs."

Again, who knew?

If this major threat was lurking on the horizon, why are Blackwell and the newspaper joining forces to inform people today? And why is the messenger Ken Blackwell?

The Enquirer endorsed former Ohio Secretary of State Blackwell last year when he ran against Democrat Ted Strickland, a former U.S. House member whose congressional district covered most of the state's coalfield counties. The newspaper's decision to hand over column space to Blackwell could be viewed as an effort to promote his political comeback and take a jab at Strickland for not protecting the coal country. Blackwell was allowed to portray himself as a watchdog of the public coffers:

"Unless wasteful requests are continuously flagged by taxpayer advocates and soundly rebuked, deals where only one party benefits will sneak by, while the nation's taxpayers and the economies of Ohio and Midwest will foot the bill."

Again, if the deal was really that awful, why no significant news coverage in the Cincinnati Enquirer? Were the editors asleep as this major job-busting threat to the state's economy was rolling down the tracks?

If the Op Ed today is true, it is a sad commentary about journalism as practiced in Cincinnati, where SW Ohio woke up to learn about "deals where only one party benefits" from a politician's newspaper column after the deal was killed.