‘Rust Belt’ Label No Longer True: Huntington Economist
YOUNGSTOWN, Ohio – The corrosion on the Rust Belt has been removed and the economy of the industrial Midwest has come back stronger than ever, the chief economist of Huntington Bancshares Inc. said Tuesday.
In a conference call with reporters, George Mokrzan, Huntington director of economics, said his most recent research shows the label given the steel-producing region of the Midwest in the 1980s, “ ’Rust Belt,’ is true no longer. We have a growing regional economy up to par with the nation.”
Mokrzan’s 20-page economic report card, “The Regional Economy in the Huntington Footprint States,” reflects the rebound Ohio, Michigan and Indiana have made since the Great Recession ended in June 2009. Huntington also has a presence in western Pennsylvania, the northern panhandle of West Virginia and northern Kentucky.
“Michigan, Indiana and Ohio have grown significantly faster than the nation during the economic recovery,” Mokrzan said. The latest recovery officially began in the third quarter of 2009 and the Huntington economist expects it to continue through 2016.
The economy of western Pennsylvania, Mokrzan pointed out, has recovered more than the central and eastern part of that state and is more like the Midwest.
Signs of continuing recovery in the Huntington footprint that Mokrzan cited:
- Unemployment rates have dropped from well above the national average in 2009 to well below the national average today. The rate in Ohio has fallen to 4.4% today from 10.9% six years ago. The rate in the Youngstown-Warren metropolitan area at Sept. 30 was 5.5%, its lowest level since the first quarter of 2001.
- The Ohio economy has grown 32% since the end of the Great Recession, far faster than the national economy, 19%, and is second only to Michigan’s growth rate of 35%, the Federal Reserve Bank of Philadelphia State Coincident Indexes found.
- Payrolls in the six states “have grown in line with the national average,” Mokrzan reported, “and well above the national average in Michigan and Indiana.” Wages, both real and nominal, are also rising because of a shortage of skilled labor in the manufacturing sector.
“Nominal wage growth will accelerate,” Mokrzan said, in part because of an increase in inflation. He projects wages will rise as much as “4% in some sectors” because of the demand for skilled labor.
Ohio is drawing more workers than are leaving for jobs in other states, the economist said, those coming here attracted by higher pay. A tighter labor market puts pressure on employers to raise wages, he noted.
More than half of the net manufacturing jobs created in the United States since June 2009 are in Ohio, Indiana and Michigan, Mokrzan reported. Of the 581,000 jobs created during that period, more than 321,200 were in those three states.
“We [Ohio] are still a manufacturing-intensive state,” Mokrzan said, despite the faster growth of jobs in the services sector.
This bodes well for the auto industry, including the General Motors Co. complex in Lordstown, on a pace to produce 18 million vehicles this year. Also contributing to the demand for vehicles are lower energy costs. Not only are automakers enjoying lower energy bills, consumers are choosing heavier cars and trucks because it costs less to fill up their tanks.
Mokrzan expects lower energy prices to continue through 2016 and the demand for coal to remain in a slump. Consumption of petroleum and natural gas will rise.
Manufacturers will continue to ship their products abroad but growth of exports will slow because of a strong dollar and a weak international economy. “Exports will level off,” Mokrzan said. “But this is not an indicator of an economy getting weaker.”
Consumer confidence has risen as reflected by the growth of per capita income. Since mid-2009 through the end of 2014, U.S. growth was 14.1% while Ohio led the six states at 17.1%. The two lowest, Michigan and Indiana, at 14.6% were above the national average.
The prices of houses in the six states have risen since the recovery began and are among the most stable in the United States. “Housing prices show stability,” Mokrzan said. Those in Ohio returned to their pre-recession level in early 2013 and have since climbed 5%, a Haver Analystics graph shows.
Moreover, “Housing affordability is highest in the Midwest,“ Haver finds.
Copyright 2023 The Business Journal, Youngstown, Ohio.