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Gary Wagner and Mary DeStefano CINCINNATI, OHIO MSA | MARCH 2018 Cincinnati—Solid Growth Continues Growth continues at a solid pace in the Cincinnati metro area, with the metro area continuing to outperform the state for most major indicators. Per capita income levels reached an all-time high in 2016, and the metro area’s unemployment rate has now been below 5.0 percent for more than three consecutive years. Job growth has occurred in most major sectors, and the metro area has added more than 16,000 jobs during the past year. Though credit card delinquency rates have edged up over the past year, they still remain well below historical norms. Home prices are continuing to increase at a steady clip, fueled by a strong labor market and a smaller number of homes for sale. METRO AREA SNAPSHOT Unemployment Rate December 2017 Median Home Value One-year change Payroll Employment Credit Card Delinquency Rate One-year change June 2017 One-year change 2017:Q4 One-year change (percent) (percentage points) (percent) (percentage points) December 2017 Cincinnati 4.1 –0.2 $156,600 5.5 1,036 1.6 6.4 0.4 Ohio 4.7 –0.3 $130,000 4.7 5,369 1.2 6.9 0.2 United States 4.1 –0.6 $206,300 6.5 143,931 1.7 7.2 0.1 The Cincinnati metro area’s unemployment rate has been below 5.0 percent for more than three consecutive years. Percent 12 10 — Cincinnati — Ohio — United States 8 6 ■ Recession 4 2 0 2007 2009 2011 2013 2015 (percent) (thousands) (percent) UNEMPLOYMENT RATE The Cincinnati metro area’s labor market conditions remain tight by historical standards, as the region’s unemployment rate ended 2017 at 4.1 percent. The metro area has now experienced 35 consecutive months during which the unemployment rate has been at or below 4.8 percent—the metro area’s lowest unemployment rate reading during the previous economic expansion (from 2002 to 2007). During the past 12 months, the metro area’s unemployment rate has remained, on average, 0.8 percentage points lower than Ohio’s unemployment rate, generally tracking the national unemployment rate. 2017 Source: Bureau of Labor Statistics/Haver Analytics. As of 2016, inflation-adjusted GDP per capita for the Cincinnati metro area exceeded its prerecession level by more than 8 percent. Index, 2007=100 110 108 106 — Cincinnati — Ohio — United States 104 102 100 ■ Recession 98 96 94 92 2006 2008 2010 2012 2014 Source: Bureau of Economic Analysis/Haver Analytics. 2016 GROSS DOMESTIC PRODUCT As of 2016, the latest year for which data are available, inflation-adjusted GDP per capita for both the Cincinnati metro area and Ohio exceeded their prerecession levels by more than 8 percent. The nation, too, exceeded its prerecession level but by a much smaller percentage (just 3.6 percent). Per capita growth rates for the metro area exceeded 2 percent in both 2015 and 2016, making these years the first two consecutive years of per capita GDP growth exceeding 2 percent since 2005. This is a noteworthy signal that the current economic expansion, which began in 2009, has really begun to take hold in the metro area. CINCINNATI, OHIO MSA FOURTH DISTRICT METRO MIX Y O U R D I S T R I C T, Y O U R D A T A MARCH 2018 EMPLOYMENT AND INDUSTRIAL SECTORS The Cincinnati metro area has 25,000 more jobs than it did in 2007. EMPLOYMENT Index, 2007:M12=100 106 104 The number of jobs in the Cincinnati metro area continues to expand at a solid pace. Compared to the prerecession levels of 2007, the metro area now has roughly 25,000 more jobs, a net increase of 2.4 percent. The metro area’s job growth exceeds that of Ohio (1.4 percent above 2007 levels) but somewhat trails that of the nation to this point (6.0 percent above 2007 levels). The current postrecovery gap between the metro area and the nation can be attributed to the metro area’s slower rate of employment growth between 2010 and 2013. However, since the beginning of 2014, metro area job growth has only slightly lagged national job growth (6.0 percent compared to 6.5 percent, respectively). Between June 2016 and June 2017, metro area employment expanded at a rate of 1.6 percent, translating to more than 16,000 jobs. During this same period, employment expanded in Ohio and in the nation at rates of 1.2 percent and 1.7 percent, respectively. — Cincinnati — Ohio — United States 102 100 ■ Recession 98 96 94 92 2007 2009 2011 2013 2015 2017 Source: Bureau of Labor Statistics’ Quarterly Census of Employment and Wages. During the past year, the financial activities sector experienced the strongest growth in the Cincinnati metro area. EMPLOYMENT GROWTH BY SECTOR The Cincinnati metro area’s leisure and hospitality sector and education and health services sector have gained jobs more briskly than those sectors in Ohio but more slowly than those sectors in the nation. During the past year (June 2016 through June 2017), the financial activities sector experienced the strongest growth in the metro area, adding jobs at a 4.0 percent clip. This growth rate far outpaced the sector’s growth rates in the state and nation of 2.3 percent and 1.9, respectively. Though this sector comprises just a 6.5 percent share of employment in the metro area, such growth is a real bright spot for the metro area’s economy because, with average annual wages that exceed $77,000, jobs in the financial activities sector pay nearly 50 percent more than the metro area’s average. Financial activities Trade, transportation, and utilities Construction Leisure and hospitality — Cincinnati — Ohio — United States Education and health services Manufacturing Professional and business services –2 0 2 4 Percent change 6 8 10 Source: Bureau of Labor Statistics Quarterly Census of Employment and Wages. The following sectors were imputed due to missing data: financial activities and construction. Nearly all major sectors of the metro area’s economy experienced employment gains between June 2016 and June 2017. Employment 12-month change Share of employment Trade, transportation, and utilities 204,672 5,275 19.5 Education and health services 160,774 2,394 15.4 Professional and business services 158,450 –160 15.1 Leisure and hospitality 130,039 2,210 12.4 Manufacturing 116,628 1,612 11.1 Financial activities 67,952 2,595 6.5 Construction 45,078 1,045 4.3 Sector SECTOR EMPLOYMENT Consistent with continued, broad-based growth, nearly all major sectors of the metro area’s economy experienced employment gains between June 2016 and June 2017. The only exception is the professional and business services sector, which shed 160 jobs (a reduction of 0.10 percent). The metro area’s largest sector—trade, transportation, and utilities—gained more than 5,200 jobs and now accounts for one of every five jobs in the metro area. Manufacturing, which now ranks as the metro area’s fifth largest job sector, gained more than 1,600 jobs during the past year. Source: Bureau of Labor Statistics Quarterly Census of Employment and Wages. The following sectors were imputed due to missing data: financial activities and construction. FEDERAL RESERVE BANK of CLEVELAND CINCINNATI, OHIO MSA FOURTH DISTRICT METRO MIX Y O U R D I S T R I C T, Y O U R D A T A MARCH 2018 INCOME In 2016, income per capita reached an all-time high for the Cincinnati metro area. I NCOME PER CAPITA Thousands of dollars 52 Continued employment growth and tightening labor market conditions 50 — Cincinnati — Ohio — United States 48 46 ■ Recession 44 42 40 2006 2008 2010 2012 2014 have helped to propel income per capita to all-time highs in 2016 for the Cincinnati metro area ($49,704), Ohio ($45,544), and the United States ($50,295). This reflects solid growth of 11.6 percent for Cincinnati, 11.9 percent for Ohio, and 11.8 percent for the nation since the lows of the last recession (in 2009). During 2016 (the most recent year for which we have data), inflation-adjusted per capita income grew 0.6 percent in Cincinnati, 0.5 percent in Ohio, and 0.4 percent in the nation. 2016 Source: Bureau of Economics/Haver Analytics. CONSUMER FINANCES The Cincinnati metro area’s consumer debt level has remained relatively stable since mid-2014. C ONSUMER DEBT Thousands of dollars 55 50 — Cincinnati — Ohio — United States 45 40 ■ Recession 35 30 25 2007 2009 2011 2013 2015 onsumer debt levels per capita for the Cincinnati metro area, state, and C nation have remained relatively stable since mid-2014. The metro area’s current average balance of mortgage, auto, and credit card debt ($33,709) is more than 20 percent lower than it was when it peaked in 2008. Because roughly two-thirds of all consumer debt nationally is mortgage debt, much of the average per capita debt differences between the metro area and the state and the metro area and the nation can be explained by differences in home prices. Everything else being equal, the average homeowner in the Cincinnati metro area will have more debt than the average homeowner in Ohio because the metro area’s home prices are higher than the state’s. 2017 Source: Authors’ calculations from the Federal Reserve Bank of New York’s Consumer Credit Panel/Equifax. The Cincinnati metro area’s credit card delinquency rate has remained at or below its current rate for more than a year. C REDIT CARD DELINQUENCY RATE Percent of credit card balances delinquent 14 12 — Cincinnati — Ohio — United States 10 8 6 ■ Recession 4 2 0 2007 2009 2011 2013 2015 2017 The credit card delinquency rate in the Cincinnati metro area has remained at or below its current rate for the past 13 months. Presently, 6.4 percent of all credit card balances in the metro area are considered to be delinquent; this rate is lower than that of Ohio (6.9 percent) and the nation (7.2 percent). Comparing the fourth quarter of 2016 with the fourth quarter of 2017, delinquency rates have ticked up from 6.0 percent to 6.4 percent in the Cincinnati metro area, from 6.7 percent to 6.9 percent in Ohio, and from 7.1 percent to 7.2 percent in the nation. However, household balance sheets remain quite strong, and the delinquency rates are still well below historical norms. Source: Authors’ calculations from the Federal Reserve Bank of New York’s Consumer Credit Panel/Equifax. FEDERAL RESERVE BANK of CLEVELAND CINCINNATI, OHIO MSA FOURTH DISTRICT METRO MIX Y O U R D I S T R I C T, Y O U R D A T A MARCH 2018 Home prices in the Cincinnati metro area have increased 5.5 percent during the last year. Year-over-year percent change 8 6 — Cincinnati — Ohio — United States 4 2 0 ■ Recession -2 HOUSING MARKET HOUSING PRICES As of December 2017, median home values for the Cincinnati metro area, Ohio, and the United States were $156,600, $130,000, and $206,300, respectively. These values constitute increases from the previous year for the metro area (5.5 percent), the state (4.7 percent), and the nation (6.5 percent). While low interest rates and solid employment growth have helped to boost home prices by increasing demand, pressure is also coming from the smallerthan-usual supply of homes for sale in the metro area. -4 -6 -8 2007 2009 2011 2013 2015 2017 Source: Zillow.com/Haver Analytics. The number of building permits issued in the Cincinnati metro area has been on the rise since April 2011. Index, 2007:M12=100, six-month moving average 250 200 — Cincinnati — Ohio — United States Cincinnati ■Average Recession of nearby metros 150 100 50 0 2006 United States Ohio 2008 2010 2012 2014 2016 H OUSING PERMITS The number of building permits for single-family homes has been trending upward since April 2011. However, permit issuance levels have yet to return to prerecession levels for the Cincinnati metro area, Ohio, and the United States. According to data from the Bureau of Economic Analysis, construction employment has yet to reach prerecession levels. Additionally, FDIC data show that bank lending to construction and land development projects in Ohio continue to remain below their prerecession levels as well. In December 2017, the number of permits issued in Cincinnati was 7.2 percent below 2007 levels. By comparison, the number of permits issued in Ohio and the United States was below 2007 levels by 24.8 percent and 8.1 percent, respectively. Still, as with increases in GDP per capita and employment, the increase in building permits is a sign that the economy continues to improve. 2018 Source: US Census Bureau/Haver Analytics. DEMOGRAPHICS AND EDUCATION Cincinnati Metro Area 2016 Population Adults with less than a high school diploma United States Change from 2010 2016 2,165,139 +2.2% Change from 2010 323,128,000 +4.5% 9.6% –2.2 pp 12.5% –1.9 pp Adults with an undergraduate 33.1% degree or higher +3.8 pp 31.3% +3.1 pp 37.8 +0.7 37.9 +0.7 $61,896 +6.2% $59,181 +4.6% Median age (years) Median household income CINCINNATI, OHIO From 2010 to 2016, the population of the Cincinnati metro area and the United States increased by 2.2 percent and 4.5 percent, respectively. Census data points to birth rate increases and an influx of foreign-born migrants as the two primary factors contributing to population growth in the metro area. During the same period, median household income increased more in the Cincinnati metro area (6.2 percent) than in the nation as a whole (4.6 percent) in inflation-adjusted terms. Increases in median household income in Cincinnati and the rest of the nation are partially attributed to tightening labor market conditions, which have been pushing up wages and salaries. Additionally, both the metro area and the nation are seeing higher levels of education among the adult population. Note: Percentage points is abbreviated as pp. Source: US Census Bureau population estimates, American Community Survey. Gary Wagner is vice president and senior regional officer of the Cincinnati Branch of the Federal Reserve Bank of Cleveland. Mary DeStefano is a research analyst at the Branch. The authors thank senior research analyst Christopher Vecchio for preparing the charts. All monthly and quarterly figures are seasonally adjusted, and all dollar figures are in constant dollars, for which the base period is provided by the latest available data. Home prices are an exception, and they are not adjusted for inflation. Where applicable, these adjustments are made prior to calculating percent changes or indexes. Several charts use indexed measures to facilitate comparisons across regions and have a reference line at 100. These numbers can be thought of as the percentages of prerecession levels. If levels were growing before the recession, prerecession indexes will be below 100; if levels were falling before the recession, prerecession indexes will be above 100. The Federal Reserve Bank of Cleveland, including its branch offices in Cincinnati and Pittsburgh, serves the Fourth Federal Reserve District (Ohio, western Pennsylvania, the northern panhandle of West Virginia, and eastern Kentucky). www. clevelandfed.org FEDERAL RESERVE BANK of CLEVELAND