Team NEO Sees ‘Early Signs’ of Recovery

YOUNGSTOWN, Ohio – The northeastern Ohio economy appears poised to perform better than earlier projected, according to a Team NEO report released April 19.

The report, based on data from Moody’s Analytics, projects that gross domestic product for the 18-county region is expected to fully recover to 2019 levels following last year’s declines caused by the pandemic. However, employment recovery will lag.

“There is reason for cautious optimism on how the economy could perform in 2021,” says Jacob Duritsky, Team NEO vice president, research and strategy. “The takeaway from this is not that we’re out of the water from the pandemic nor that it didn’t hugely impact us, but that some early signs are indicating that we might do a little better coming out of this than we would have originally anticipated.”

According to projections made in November, the region was expected to show a 5% decline in GDP, with an expectation to regain about half that in 2021, “still well below where we were going into the pandemic,” Duritsky says.

Instead, March figures showed just a 3% decline in regional GDP last year, with a 4% growth rate expected in 2021. “We’ll actually net new GDP from where we were in 2019 in 2021 if these projections hold as they are today,” he says.

Employment is also expected to do better than earlier projections showed, although those gains won’t be as pronounced. 

The region lost about 175,000 jobs at the peak of the pandemic impact in 2020. November’s projections showed flat job growth in 2021. The updated projections show job growth of about 1.7% this year.

“We will not recover from the jobs we lost in the pandemic. Unlike GDP, it’s not going to be that type of recovery,” Duritsky says. The 1.7% projected growth equates to between 25,000 and 30,000 new jobs.  

According to the report, nearly all sectors of the regional economy are projected to see growth in GDP and employment, with the exception of some portions of government, leisure and hospitality, and real estate, particularly commercial.

Mining and gas extraction are projected to lead in both GDP and employment growth, with GDP increasing about 13% and job growth up around 9%. Other sectors projected to show strong GDP growth are information (10%) and headquarters (8%), while top performers in employment administrative and support (just over 6%) and construction and education (each around 3.5%). 

Among the assumptions built into the updated Moody’s projections are the anticipated speed of reopening for sectors of the economy such as arts and entertainment, Duritsky says.

The projections also take into account the effect of federal stimulus funds – those distributed to consumers and to support state and local governments  – and expectations that interest rates will remain low.

Duritsky points to the impact of reopening supply chains that were disrupted because of the shift to producing personal protective equipment, or shut down because they weren’t in essential industries or because people weren’t making big purchases such as automobiles.

“Some of those issues are starting to loosen and we’re starting to see supply chains function a little more normally,” Duritsky says. “It’s showing up from an output perspective and a jobs perspective in manufacturing, but also in adjacent sectors, too.”

What could throw those projections off would be the inability of sectors to recover as believed because of people still dealing with the consequences of the virus or setbacks

“I use the phrase, ‘cautiously optimistic,’ emphasis on ‘cautious,’ because the next three to six months are going to be critically important for whether we start to realize some of that upside potential,” Duritsky says.