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CLEVELAND, Ohio MSa | fIRST QUARTER, 2014 Cleveland – A Welcome Recovery Recessions hit the Cleveland–Elyria metropolitan area harder than the nation as a whole because the metro has a strong concentration of durable goods manufacturing, one of the most vulnerable sectors in a downturn. However, this sector has recovered well from the most recent recession and has contributed to the metro’s gain of about 34,000 jobs since the recovery began. This is dramatically better than its loss of 18,000 jobs during the recovery from the 2001 recession. Cleveland’s output, earnings, and unemployment rate have also bounced back nicely. Nonetheless, the metro continues to lose population, and, as a result, its housing market remains comparatively weak. Unemployment in the Cleveland metro area rose to 7.3% in 2013 Percent 12 12 UNEMPLOYMENT RATE 66 — Cleveland — Ohio — United States — Nearby metro average 44 ■ Recession 10 10 88 22 00 2000 2000 2002 2002 2004 2004 2006 2006 2008 2008 2010 2010 2012 2012 2014 2014 During the recession, the Cleveland metro’s unemployment peak was far below that of the nation, Ohio, and the average of nearby metros. However, it rose from 6.8 percent to 7.3 percent in 2013, while the nation and nearby metros saw further declines in unemployment. Since the metro’s output and employment are increasing, the rise in the unemployment rate may result from re-entry into the labor market of people who had given up looking for work. This view is supported by modest growth in the metro’s labor force during 2013. Source: Bureau of Labor Statistics/Haver Analytics. Gains in GDP per capita resulted from export growth, population loss, and the recovery of manufacturing Index, 2007=100 104 104 — Cleveland — Ohio — United States — Nearby metro average 102 100 100 98 96 96 94 92 92 ■ Recession 90 GROSS DOMESTIC PRODUCT The metro’s GDP per capita grew steadily in 2010, 2011, and 2012; it was just under pre-recession levels in 2012. Ohio and nearby metros had similar growth rates, but the nation remained more than 3 percent below pre-recession levels. The metro’s robust growth in GDP per capita is due to strong export growth, continued population loss, and the recovery of manufacturing output. 88 88 86 84 84 2000 2001 2002 2003 2004 2000 2002 2004 2005 2006 2006 2007 2008 2008 2009 2010 2010 2011 2012 2012 Source: Bureau of Economic Analysis/Haver Analytics. Robust price increases in downtown housing could not offset reduced housing demand Year-over-year percent change 1515 — Cleveland — Ohio — United States — Nearby metro average 10 10 55 00 ■ Recession –5-5 -10 –10 -15 –15 2005 2005 2006 2007 2007 2008 2009 2009 Source: Zillow.com/Haver Analytics. 2010 2011 2011 2012 2013 2013 HOUSING Prices The population loss that helped increase GDP per capita has also limited the rise in house prices. While the metro’s house prices have risen since December 2012, increases in the nation, Ohio, and nearby metros were earlier and stronger. In December 2013, Ohio’s year-over-year percent gain in house prices was double the metro’s. Although certain submarkets—particularly those in and around downtown Cleveland—have seen vigorous price growth, it has not been enough to counteract the reduced demand for housing that accompanies population loss. CLEVELAND, Ohio MSA FOURTH DISTRICT METRO MIX YOUR DISTRICT, YOUR DATA fIRST QUARTER, 2014 EMPLOYMENT AND INDUSTRIAL SECTORS The Cleveland metro’s employment growth is outpacing nearby metros but is lagging behind Ohio’s EMPLOYMENT Index, 2007: M12=100 102 The Cleveland metro, home to seven Fortune 500 companies, has recovered much better from the 2007–09 recession than it did from the 2001 recession. The Cleveland metro and Ohio lost larger jobs shares during the recession than the nation or the group of nearby metros. Employment has grown steadily in all four regions since March 2010. Although the metro’s employment growth in 2010 and 2011 was relatively weak, it has held steady since March 2012. Employment is growing faster in Cleveland than in nearby metros but just a little slower than in Ohio. 102 96 — Cleveland — Ohio — United States — Nearby metro average 94 ■ Recession 100 100 98 98 96 94 92 92 90 2005 90 2005 2006 2007 2007 2008 2009 2010 2009 2011 2012 2011 2013 2013 Source: Bureau of Labor Statistics. Leisure and hospitality services grew 4.5% in a year EMPLOYMENT GROWTH BY SECTOR Leisure and hospitality From June 2012 to June 2013, the only supersector that grew faster in the metro than in Ohio or the US was leisure and hospitality services, which grew 4.5 percent. This resulted partly from the opening of the Horseshoe Casino in May 2012, which created jobs directly, attracted new restaurants, and increased demand for hotels. The next-fastest-growing supersector was professional and business services. Construction grew much less in the metro than in the nation or Ohio, which reflects the metro’s relatively weak housing market. More worrisome for the future is that the metro’s manufacturing employment was essentially flat over the year, whereas it grew in both Ohio and the nation. Professional and business services Construction Education and health services Financial activities Trade, transportation, and utilities — Cleveland Manufacturing — Ohio Government — United States Information -2 -1 0 1 2 3 4 5 Percentage change Source: Bureau of Labor Statistics. Government was the only supersector with more than 10 percent of the metro’s employment that lost jobs RELATIVE EMPLOYMENT GROWTH Increasing employment growth Percent 5 Leisure and hospitality 4 3 Professional and business services 2 Construction 1 Financial activities Manufacturing 0 Government -1 -2 Education and health services Trade, transportation, and utilities Larger share of metro’s overall employment Information 0 5 10 Source: Bureau of Labor Statistics. FEDERAL RESERVE BANK of CLEVELAND 15 Percent 20 25 Although employment growth may be slower in Cleveland than in the nation or the state, it is broadly based. Government was the only supersector with more than 10 percent of the metro’s employment that lost jobs; it has suffered in most metros due to federal, state, and local budget cuts. Each of two high-paying sectors, professional and business services and health and education services, employs more people than manufacturing; these sectors continue to grow, showing the metro’s evolution toward a more diversified economy. Information lost 1.7 percent of its jobs, but it represents only a tiny portion of the metro’s employment. CLEVELAND, Ohio MSA FOURTH DISTRICT METRO MIX YOUR DISTRICT, YOUR DATA fIRST QUARTER, 2014 HOUSING MARKET Nearby metros are issuing 20 percent more housing permits than before the recession H OUSING PERMITS Index, 2007: M12=100, three-month moving average 350 350 — Cleveland — Ohio — United States — Nearby metro average 300 300 250 250 200 200 150 150 ■ Recession 100 100 50 50 00 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: Census Bureau/Haver Analytics. Homebuilding is still well below its pre-recession levels in the Cleveland metro, as well as in Ohio and the nation. This is not surprising, because there was an oversupply of new housing going into the recession. What is surprising is that, on average, metros within 200 miles of Cleveland have 20 percent more housing permits issued than before the recession. This growth is driven by the Pittsburgh and Columbus metros, both having highly educated populations with strong income growth and, in the case of Columbus, population growth. Since the Cleveland metro continues to lose population, the number of housing permits issued will probably remain relatively low. Consumer Finances Mortgage, auto, and credit card debt continue to decline C ONSUMER DEBT !"#$%&'(%) Thousands of dollars 55 55 — Cleveland — Ohio — United States — Nearby metro average 50 50 45 45 40 40 35 35 ■ Recession 30 30 25 25 20 20 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2000 2002 2004 2006 2008 2010 2012 Source: FRBNY Consumer Credit Panel. Consumer debt per capita grew more slowly in the Cleveland metro than in the US from 2003 to 2007, primarily because house prices rose faster in other parts of the nation. The sharp drop in house prices that accompanied the recession, along with increases in foreclosures and reductions in homeownership, have reduced mortgage debt since 2007. The rate of decline in consumer debt has been roughly the same in the Cleveland metro as in Ohio, nearby metros, and the nation. One would expect the nation to have the largest declines in consumer debt because its house prices fell more, but this effect may be offset by higher foreclosure rates in Ohio and its metros. The Cleveland metro’s credit card delinquency rates remain below prerecession levels C REDIT CARD DELINQUENCY RATES Percent of delinquent credit card balances 1414 — Cleveland — Ohio — United States — Nearby metro average 1212 1010 88 66 ■ Recession 44 22 0 02000 2001 2002 2003 2004 2000 2002 2004 2005 2006 2006 2007 2008 2008 2009 2010 2010 2011 After rising steadily from 2005 to 2010, the Cleveland metro’s credit card delinquency rates fell in 2011 and remain below pre-recession levels. The improvement probably results from the general economic recovery and from lenders’ restriction of access to credit. The nation saw a much sharper increase in credit card delinquency during the recession, a sign that the recession was more severe nationally than in the metro. 2012 2012 Source: FRBNY Consumer Credit Panel/Haver Analytics. FEDERAL RESERVE BANK of CLEVELAND CLEVELAND, Ohio MSA FOURTH DISTRICT METRO MIX YOUR DISTRICT, YOUR DATA fIRST QUARTER, 2014 INCOME The metro’s average weekly wages has risen to $790 A VERAGE WEEKLY EARNINGS Dollars, three-month moving average 900 900 The average weekly wages of people employed in the Cleveland metro dropped from $877 in January 2007 to $734 in January 2010. This is a sharper drop than in nearby metros, Ohio, or the nation and probably results from the metro’s concentration of high-paying manufacturing jobs and the severe reduction in manufacturing employment during the recession. As the metro’s economy has recovered, so have average weekly wages, which are now at $790, halfway between those of the nation and Ohio. — Cleveland — Ohio — United States — Nearby metro average 850 850 800 800 750 750 ■ Recession 700 700 650 650 600 600 2007 2007 2008 2008 2009 2009 2010 2010 2011 2011 2012 2012 2013 2013 Source: Bureau of Labor Statistics/Haver Analytics. By 2012, the metro’s income per capita was $1,055 higher than the nation’s I NCOME PER CAPITA Thousands 4646 3838 — Cleveland — Ohio — United States — Nearby metro average 3636 ■ Recession 4444 4242 4040 The Cleveland metro remains a very productive region; its per capita income exceeds that of the nation, Ohio, and the average of nearby metros. Although all four geographic areas experienced similar declines in income per capita from 2007 to 2009, Cleveland’s grew fastest from 2009 to 2012. The metro’s income per capita was $1,055 above the nation’s in 2012, the largest gap between the two since 2003. 3434 3232 30302001 2002 2002 2003 2004 2004 2005 2006 2006 2007 2008 2008 2009 2010 2010 2011 2012 2012 Source: Bureau of Economic Analysis/Haver Analytics. DEMOGRAPHICS AND EDUCATION Cleveland metro 2012 Population United States Change from 2009 2012 Change from 2009 2,063,535 -1.3% 313,914,040 +2.2% Adults with less than a high school diploma 11.5% -0.8% 14.1% -0.7% Adults with a bachelor’s degree or higher 28.5% +1.6% 28.5% +0.6% 41.2 +1.0 years 37.4 +0.6 years $48,425 -3.5% $52,991 -4.6% Median age (years) Median household income CLEVELAND, OHIO According to 2012 Census estimates, Cleveland is the 29th largest of the nation’s 381 metropolitan statistical areas. Sources: Census Population estimates; American Community Survey. All monthly figures are seasonally adjusted and all dollar figures are in current dollars. 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 pre-recession levels. If levels were growing before the recession, pre-recession indexes will be below 100; if levels were falling before the recession, pre-recession 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
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