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CLEVELAND, OHIO MSA | THIRD QUARTER, 2014 Cleveland – Further Improvement Though growth continues to be slower than national and statewide advances, the Cleveland metro area’s economy has strengthened in the first half of 2014. The housing market has particularly improved, with both house prices and building permits increasing. The metro area has also experienced a sharp decline in unemployment and modest increases in job numbers and average weekly wages. The latest data shows that 28.5 percent of adults in Cleveland have a bachelor’s degree, bringing the metro area up to the nation’s rate. The Cleveland metro area’s unemployment rate has dropped to 6.8% in 2014 UNEMPLOYMENT RATE Percent 12 6 — Cleveland — Ohio — United States — Nearby metro average 4 ■ Recession 10 8 During the recession, unemployment increased far less in the Cleveland metro area than in the nation, state, and the average of nearby metro areas. After slightly increasing in 2013, the metro’s unemployment rate has dropped sharply in 2014 (from 7.5 percent in December 2013 to 6.8 percent in May 2014). The nation, state, and nearby metro areas experienced similar declines. 2 0 2000 2002 2004 2006 2008 2010 2012 2014 Source: Bureau of Labor Statistics/Haver Analytics. GDP per capita growth continues GROSS DOMESTIC PRODUCT Index, 2007=100 105 — Cleveland — Ohio — United States — Nearby metro average 100 95 90 ■ Recession 85 80 2001 2003 2005 2007 2009 2011 The metro area’s GDP per capita grew steadily in 2010, 2011, and 2012; it was just under pre-recession levels in 2012 (the latest period for which data is available). Ohio and nearby metro areas had similar growth rates, but the nation remained about 3 percent below pre-recession levels. The metro area’s robust growth in GDP per capita is due to strong export growth, continued population loss, and the recovery of manufacturing output. 2013 Source: Bureau of Economic Analysis/Haver Analytics. Housing prices in Cleveland have improved in 2014, but still lag increases in the nation, Ohio, and nearby metro areas HOUSING PRICES Year-over-year percent change 15 10 5 0 –5 –10 –15 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: Zillow.com/Haver Analytics. — Cleveland — Ohio — United States — Nearby metro average ■ Recession The population loss that helped increase GDP per capita has limited the rise in house prices because demand for housing is strongly linked to population growth. While the metro area’s house prices have risen since December 2012, increases in the nation, the state, and nearby metros were earlier and stronger. In June 2014, Ohio’s year-over-year percent gain in house prices was double Cleveland’s. While the rate of growth has slowed nationally in 2014, the state, Cleveland, and nearby metros are seeing continued increases in the growth rates of house prices. CLEVELAND, OHIO MSA FOURTH DISTRICT METRO MIX YOUR DISTRICT, YOUR DATA THIRD QUARTER, 2014 EMPLOYMENT AND INDUSTRIAL SECTORS Cleveland’s employment recovery from the Great Recession is stronger than its recovery from the 2001 recession EMPLOYMENT Index, 2007: M12=100 The Cleveland metro area’s employment recovery from the 2007–2009 recession continues to be stronger than its recovery from the 2001 recession. The metro area saw fairly steady employment growth in both 2012 and 2013. Over that time, Cleveland’s employment growth was a little behind Ohio’s, but ahead of advances in nearby metro areas. While the nation had faster employment growth than the Cleveland metro area in both years, the difference is not as great as was typical in the years leading up to the recession. 102 96 — Cleveland — Ohio — United States — Nearby metro average 94 ■ Recession 100 98 92 90 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: Bureau of Labor Statistics. Manufacturing growth in the metro area remains stalled EMPLOYMENT GROWTH BY SECTOR The Cleveland metro area is home to seven Fortune 500 companies and its economy has grown more diverse since 2000. In both the Cleveland area and Ohio, the sector with the largest percent gain in employment from December 2012 to December 2013 was professional and business services, which grew 2.4 percent in the metro. In all sectors except government, Cleveland saw less growth than the state or nation. Given its continued importance to the metro area’s economy, it is troubling that manufacturing employment was flat in Cleveland while growing modestly in the state and nation. Professional and business services Leisure and hospitality Construction Education and health services Government — Cleveland — Ohio — United States Trade, transportation, and utilities Information Manufacturing Financial activities –2 –1 Source: Bureau of Labor Statistics. 0 1 2 3 Percentage change 4 5 Two major sectors saw more than a 1% gain in employment since June 2013 RELATIVE EMPLOYMENT GROWTH While only two sectors—professional and business services and leisure and hospitality—saw more than a 1 percent gain in employment in 2013, they are significant sectors that account for 24 percent of the metro area’s employment. Seventy percent of the region’s employment is in sectors that gained or lost less than 0.5 percent of their employment in 2013. The only sector that lost more than 0.5 percent of its employment last year, financial services, held 6 percent of the metro’s employment. Increasing employment growth Percent 3.0 2.5 Professional and business services Leisure and hospitality 2.0 1.5 1.0 0.5 Education and health services Construction Information Government 0 Manufacturing –0.5 Trade, transportation, and utilities Larger share of metro’s overall employment Financial activities –1.0 –1.5 0 2 4 6 Source: Bureau of Labor Statistics. FEDERAL RESERVE BANK of CLEVELAND 8 10 12 Percent 14 16 18 20 CLEVELAND, OHIO MSA FOURTH DISTRICT METRO MIX YOUR DISTRICT, YOUR DATA THIRD QUARTER, 2014 HOUSING MARKET The number of permits issued for new single-family homes in Cleveland has increased in 2014 H OUSING PERMITS Index, 2007: M12=100, three-month moving average 350 — Cleveland — Ohio — United States — Nearby metro Cincinnati average Average of ■ nearby Recessionmetros 300 250 200 150 100 United States 50 0 Ohio 2006 2008 2010 2012 2014 Source: Census Bureau/Haver Analytics. During the first half of 2014, the seasonally-adjusted number of permits issued for new single-family homes declined slightly in the country, but increased in the Cleveland metro area, the state, and nearby metro areas. However, homebuilding is still well below its pre-recession levels in the Cleveland metro area, as well as in the state and nation. This is not surprising as there was an oversupply of new housing going into the recession. What is surprising is that, on average, metro areas 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 metro areas. CONSUMER FINANCES Cleveland’s rate of decline in consumer debt is in line with that of Ohio C ONSUMER DEBT Thousands of dollars 55 — Cleveland — Ohio — United States — Nearby metro average 50 45 40 35 ■ Recession 30 25 20 2001 2003 2005 2007 2009 2011 2013 Source: FRBNY Consumer Credit Panel. Consumer debt per capita grew more slowly in the Cleveland metro area than the national average 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 metro areas. Credit card delinquency rates remain below pre-recession levels in the Cleveland metro area C REDIT CARD DELINQUENCY RATES Percent of credit card balances delinquent 14 — Cleveland — Ohio — United States — Nearby metro average 12 10 8 6 ■ Recession 4 2 0 2001 2003 2005 2007 2009 2011 After rising steadily from 2005 to 2010, the Cleveland metro area’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 area. 2013 Source: FRBNY Consumer Credit Panel/Haver Analytics. FEDERAL RESERVE BANK of CLEVELAND CLEVELAND, OHIO MSA FOURTH DISTRICT METRO MIX YOUR DISTRICT, YOUR DATA THIRD QUARTER, 2014 INCOME Average weekly wages of people employed in the Cleveland metro area are $818 Dollars, three-month moving average A VERAGE WEEKLY EARNINGS 900 After declining sharply during the recession, average weekly wages have tended to rise in the Cleveland metro area since the beginning of 2012. Over that time, weekly wages have been essentially flat in the nation and nearby metro areas. Ohio has seen moderate declines in average weekly wages since the start of 2013. In June 2014, the average weekly wages of people employed in the Cleveland metro area were $818. This value is $25 less than the national average and $56 more than the state’s. — Cleveland — Ohio — United States — Nearby metro average 850 800 750 ■ Recession 700 650 600 2007 2008 2009 2010 2011 2012 2013 2014 Source: Bureau of Labor Statistics/Haver Analytics. Cleveland’s per capita income exceeds that of the nation, state, and the nearby metro average I NCOME PER CAPITA Thousands of dollars 48 46 The Cleveland metro area remains a very productive region. Its per capita income exceeds that of the nation, state, and the average of nearby metro areas. 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 area’s income per capita was $1,055 above the nation’s in 2012, the largest gap between the two since 2003. — Cleveland — Ohio — United States — Nearby metro average 44 42 40 ■ Recession 38 36 2001 2003 2005 2007 2009 2011 2013 Source: Bureau of Economic Analysis/Haver Analytics. DEMOGRAPHICS AND EDUCATION Cleveland metro area 2012 Population United States Change from 2009 2012 Change from 2009 2,063,535 -0.8% 313,914,000 +2.3% Adults with less than a high school diploma 11.5% -0.8% 14.1% -0.7% Adults with an undergraduate degree or higher 28.5% +1.6% 28.5% +0.6% 41.2 +1.0 years 37.4 +0.6 years $48,733 -3.4% $53,329 -4.4% 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. Employment data in the Metro Mix come from the Quarterly Census of Employment and Wages, which we have found to be the earliest accurate source of the number of jobs in metro areas. 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