Current state of US economy and effect of business in Ohio.
The American economy has suffered the deepest and most protracted recession since the Great Depression. The financial crisis that began in the fall of 2008 had enduring effects on economic performance. In the first quarter of 2009, real gross domestic product (real GDP) fell by 6.4 percent. Real GDP fell for four straight quarters, from third quarter 2008 through second quarter 2009. The good news is that we have enjoyed more than three years of uninterrupted economic growth (Real GDP) and falling unemployment since the recession ended in June 2009. Economic growth (real GDP) has averaged less than 2.1% since the recovery began July 2009 and is have slowed to less than 1% in the most last quarter of 2012 quarter. It seems like a good time to take a step back, assess the current economic outlook, and see what it means for the business in Ohio.
Budget problems remain the major obstacle to faster growth. The fiscal cliff deal did reduce the deficit but it was really small. Part of the large current deficit is result of a weak economy and increased spending by the government. Moreover, if the economy were growing at its historical average rate of 3.25% a year, the U.S. could afford to run a deficit. the increase GDP in the first quarter of 2013 could be as good as it gets for the year as businesses and consumers begin to feel the impacts of the sequester and the expiration of the payroll tax cut. The futures estimates are for slightly slower growth this year – an estimated 1.8%, down from 2.2% in 2012. This would be a small improvement in growth this year, followed by 3% or more in 2014. While that would get the economy back to its long-term average growth rate, it would remain far short of the rebound that normally follows a recession. Primary Economic factors comparing US and Ohio are below. GDP. US economy is producing more goods and services than before the recession began. In the final three months of 2007, it produced an annual rate of $13.3 trillion in goods and services, a record high. That figure had shrunk to $12.7 trillion when the recession ended. It then began to recover. The U.S. gross domestic product, the broadest gauge of production, regained its previous peak by the end of 2011. And in the first three months of 2013, the GDP was $13.75 trillion. Ohio’s economy contracted more sharply than the national economy in 2008 and 2009, but now is rebounding at a respectable pace, Ohio change in real GDP was 2.1% compared to National change of 1.5% and Ohio’s economy is forecast to match the pace of the national recovery in 2013. Ohio is expected to gradually close the gap between the state’s output level and the national trend in output. Unemployment. For the past three years, unemployment has been coming down slowly but steadily. The unemployment rate has been below 8% since September 2012, down from the recession high of 10% in October 2009. The most recent data showed it was at 7.6% March 2013, the lowest rate in four years. While the labor market is healing from the Great Recession, the high rate of long-term unemployment continues to pose a significant challenge for workers and the economy. Significantly faster job creation would be needed to bring unemployment down to historical average of 6%. The steady drop in the state’s unemployment rate is a sign the economy is growing faster. Currently Ohio unemployment rate is 7.1% which is relatively lower than the National Average of 7.6%. In Ohio, over two-thirds of manufacturing employment is in production of durable goods, such as machinery, motor vehicles and steel. Ohio also has a higher concentration of employment in manufacturing than most other states. The downside to having generally high-paying manufacturing jobs is that they are more negatively impacted by business cycles. Ohio’s manufacturing industry has experienced downsizing, plant closings and restructuring, and as such manufacturing...
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