YOUNGSTOWN, Ohio – Despite the strain of stubbornly elevated prices and uncertainty surrounding global trade last year, the U.S. and local economy stand on solid footing, economists say.
“There’s a lot of positive momentum going into 2026, and I think the long-term trajectory is positive,” says AJ Sumell, professor of economics at Youngstown State University, about the regional economy. “We’re a more diversified economy than we were six or seven years ago.”
This is evident especially in the Mahoning Valley, where the negative impact of recent mass layoffs at Ultium Cells in Lordstown is likely to be offset long-term by future projects such as Kimberly-Clark’s $800 million manufacturing plant in Warren, and Foxconn’s plans to convert the former General Motors Lordstown plant into a production center for modular data centers.
In January, Ultium – which manufactures battery cells for the electric vehicle market – placed more than 448 hourly workers on permanent layoff and another 850 on temporary layoff, citing slackened demand in the EV market. The loss of these jobs is significant, Sumell says, and likely to cause disruption to the local economy in the short-term.
“The loss of 1,300 manufacturing jobs is certainly a negative shock to the economy,” Sumell says. “That represents about 8% of all manufacturing jobs in the Mahoning Valley.”
However, the long-term prospects are much brighter. “You also have some positive news in terms of Kimberly-Clark, Foxconn and the Innovation Hub,” the latter a project to renovate the former Vindicator building in downtown Youngstown into a center for advanced manufacturing and research for the aerospace and defense markets.
“So, in the end, there’s a lot of momentum going into 2026,” he says.
Employment Gains
Moreover, employment levels have finally recovered from the pandemic of six years ago, Sumell says. “Employment growth has happened on a broader array of sectors,” he says, singling out construction and mining as industries where employment rose in 2025. “They’ve all inched up a little bit. I’d say the largest growth sector was in construction and mining,” he says.
Employment in that sector improved approximately 6% year-over-year, Sumell says. “All the other sectors either increased or decreased by less than 2%.”
Sumell says the U.S. economy overall is fundamentally strong enough to ward off – at least for now – any mitigating factors such as a softening job market. In short, he projects that the economy in 2026 will likely remain stable. “I think we’ll just continue to see relatively modest growth – not any significant change,” he says.
Sumell points out that there are certainly challenges such as a slowing jobs market and a potential pullback in consumer spending this year. Yet given the most recent data, he assesses that there is no indication of an imminent economic downturn. “The current information does not suggest that any recession is impending,” he notes. “That doesn’t mean it won’t happen, but with any kind of forecast, it’s based on the information we have.”
Ed Knotek, senior vice president and director of research for the Federal Reserve of Cleveland, observes that the general U.S. economy expanded at a solid pace in 2025, but also experienced higher unemployment rates and slower job growth. “This is an unusual pattern in an expansion, but in line with the resilience of the overall economy. There are no signs of rapid deterioration,” he said during a recent Fed Talk presentation.
Causes for Concern
There are, however, causes for concern as signs of a slowing job market and additional financial pressures on average American households test the economy’s strength and resilience, says Abdihafit Shaeye, professor of economics at Kent State University at Trumbull.
Meanwhile, consumer spending, coupled with accelerated investment in technology such as artificial intelligence, has helped power the economy forward.
“Gross domestic product [GDP] growth has been driven mainly by strong consumer spending and rising investment in artificial intelligence, which is beginning to boost productivity,” he says.
Consumer spending, Shaeye observes, remained solid through 2025 and continues to do so into the first month of 2026. “Many economists were surprised by how resilient consumption remained throughout 2025, despite a softening labor market and heightened uncertainty,” he says. “In the near-term, consumer spending is likely to remain fairly stable.”
There are certain caveats though, Shaeye says. “Higher-wealth households, who have benefitted disproportionately from asset appreciation and income growth, continue to account for a large share of the spending,” he says, helped along in part by revisions in tax policies that stand to favor top earners.
The outlook isn’t as optimistic for average households, Shaeye notes. He cites rising costs for necessities – especially housing and health care, along with higher debt – as potential obstacles to growing personal wealth. For some, the expiration of health care subsidies further exposed individuals and families to higher costs. “This makes consumer resilience outside the top income brackets shaky,” he says.
Although inflation has cooled to approximately 2.8% from its peak of 9% in 2022, prices are still elevated and are above the Federal Reserve’s 2% target, Shaeye says. “Many households are struggling with housing, food and health-care costs,” he says.
In some cases, higher prices are the result of uneven tariff and trade policies enacted by the Trump administration in 2025, Shaeye notes. However, the economist says that the overall impact of tariff policy has been smaller than initially expected because of companies restructuring their supply chains, tax workarounds and exemptions. Nevertheless, Shaeye says the most recent data show that U.S. importers and consumers have shouldered nearly all the costs of tariffs through higher prices. “Beyond direct price effects, uncertainty around trade policy has weighed on economic activity by discouraging long-term investment and planning,” he says.
In a 6-3 decision Friday, the U.S. Supreme Court struck down President Donald Trump’s far-reaching global tariffs.
Another sector pushing the economy is faster-than-anticipated adoption of artificial intelligence and investment in this sector, Shaeye says. “Artificial intelligence stands out as a catalyst for growth across the broader economy,” he says. “It has the potential to boost productivity in manufacturing, health care delivery, logistics, energy and professional services. The economy’s main strength remains investment-driven productivity growth, particularly from AI.”
There is growth potential in other sectors as well, Shaeye says, including manufacturing, technology, health care and energy. Ohio, he says, has developed a more diversified economy and has made important investments in technology and advanced manufacturing. The state also maintains a cost structure that is competitive with other states, which makes it attractive for new investment.
“At the same time, Ohio faces challenges, including above-average exposure to trade-sensitive industries,” Shaeye says. In addition, some development projects across the state also depend on federal funding, and recent government spending cuts extend a measure of uncertainty, he adds.
Indicators to Watch
Moving forward, Shaeye says there are four major indicators to pay close attention to in 2026. Among these are consumer confidence levels, which he notes have declined because of concerns over prices and household finances. Second, the labor market – which has softened – should be a solid indicator of the economy’s direction this year. Another includes tracking the 10-year treasury yield, which he says has trended downward and “may signal slowing growth expectations.” Fourth, investors and economists should pay attention to equity markets through the year and especially assess the risk of a market correction should AI stocks be deemed overvalued.
“That said, faster-than-expected AI adoption and productivity gains could partially offset labor market weaknesses and trade uncertainties,” Shaeye says, “making a recession unlikely for now.”
Pictured at top: AJ Sumell, professor of economics at Youngstown State University, says the Mahoning Valley enters 2026 on solid footing.
