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After the Great Recession, recovery still slow



Published: Thu, October 11, 2012 @ 12:01 a.m.

RELATED: Mahoning real-estate tax collections increase in spite of lower valuations

By BURTON SPEAKMAN

and JAMISON COCKLIN

news@vindy.com

YOUNGSTOWN

Although recent economic trends are on the upswing in the Mahoning Valley, they remain far from pre-recession levels in late 2007, a year before the crisis unfolded.

While key indicators are up, the pace indicates the local economy is growing but not fast enough, experts said.

Officially, the Great Recession began in December 2007 and continued through June 2009, though the impact was most widely felt in September 2008.

The Valley has not recovered the jobs lost since 2007, said George Zeller, a Cleveland-based economist. There were 258,000 people employed in Mahoning, Trumbull and Columbiana counties in August 2007; that number was down to 245,100 in August 2012.

The Youngstown area is experiencing better economic growth than other parts of the state, but also had much deeper job losses that can been extended back to the

collapse of the steel industry, he said. The third-quarter data, which include August, show a 1 percent growth rate in the three-county region, but this still leaves a decline of 8.7 percent since 2007.

“While the rest of the nation was growing from 2000 to 2007, Ohio and the Mahoning Valley were losing jobs,” Zeller said. “We are starting a slow recovery, but we need to speed up that rate of recovery.”

Housing

The housing market has shown some signs of recovery, but steep hurdles remain, said Michael D. Klacik, co-owner and broker at Klacik Realty.

The most significant indicator of the loss in the real-estate market is the drop in the

median home price by more than $20,000 in each of the three counties since 2007.

Housing construction starts are down 80 percent to 90 percent from 2005 levels when the market started to collapse, although they went up recently by 5 percent to 10 percent, he said. The price of homes remains about 20 percent to 25 percent lower than it was before the recession.

Yet property taxes have ticked up in places such as Mahoning County, despite a decline in home valuations ­— a sign that homeowners face the kind of job prospects that allow them to pay their property taxes at a steady rate.

If anything, a region’s housing market is perhaps the greatest indication of financial stability and wealth in a given market.

“We’re nowhere near out of the hole. We’ve shown some signs of climbing the ladder, but there are a whole lot of rungs left,” Klacik said. “There’s plenty of room for improvement, there’s no question about it.”

There are signs of recovery with the shale boom, strong auto sales for manufacturers such as General Motors and gains at large employers such as V&M Star, but overall the recession hit this area hard, he said.

BUSINESS

Last week, both PNC Bank and the Council of Smaller Enterprises released two surveys highlighting the sentiment of small-business owners across the state and in Northeast Ohio.

The COSE survey found that a majority of those polled feel they are worse off now than they were five years ago, while the PNC survey found small business owners to be more optimistic about the local economy than the national one.

In general, businesses are forecasting lower earnings and many continue to curb full-time hiring on fears of a volatile global economy and uncertainty surrounding the forthcoming presidential election next month.

Job growth throughout the Mahoning Valley has been on the rebound since August 2009 when the unemployment rate reached 12.8 percent.

Though it fell to 7.7 percent in August 2012, gains have not yet been made to keep pace with the amount of jobs lost during the recession.

Likewise, a tempered outlook on the behalf of employers has helped keep wages down. Wages are down by 10.3 percent compared to 2007 levels, according to Consumer Price Index figures.

“In wages, we are not recovering at all. Wages are falling in both the Mahoning Valley and in Ohio as a whole, even as slow job growth has resumed,” Zeller said.

The impact of the recession has changed. It previously was focused on job losses, which have stopped, he said.

The key problem remaining is falling wages, and that problem has not been solved, Zeller said.

RETAIL

Sales-tax collections are up by 4.3 percent in August 2012 over the pre-recession figures, but when inflation is included that local economic gain becomes a loss.

When adjusted for inflation, sales-tax collections are down 5.3 percent for the Valley.

The increase simply reflects inflation, “not real growth in the sales-tax collections,” Zeller said.

“Obviously, the impact of the 2007-09 recession was very deep in Youngstown-Warren, and thus we still have a long way to go until we recover the level of retail sales that the Valley had in 2007,” he said.

The recession changed the way property owners thought about using retail space, said Joe Bell, spokesman for the Cafaro Co., which owns Eastwood Mall in Niles.

“There were a number of big-box retailers including Circuit City, Borders Books and Linens N’ Things. They all went belly up, and we had all of them at the Eastwood Mall,” he said.

Vacancies are being filled by seasonal or second-hand stores, training centers, churches and other nontraditional uses, Bell said. There are even shopping centers bringing back grocery stores.

In general, this holiday season is expected to bring a mild onslaught of shoppers, and many big-name retailers are preparing to hire thousands of temporary workers.

Banking and consumer spending

The region’s banks have made headway in attracting new customers and more deposits, going from $8.5 billion in 2007 to $9.2 billion in deposits at the end of June. As a result, Youngstown’s banks have more liquidity and are more apt to lend, said Terry McEvoy, a senior bank analyst at Oppenheimer & Co.

For example, First National Bank of Pennsylvania increased deposits from about $817 million in 2007 to $1.1 billion this year, adding five new locations in that time in a bid to grow market share here, which went from 9.6 percent to 12.8 percent in the Youngstown statistical area.

At the same time, second-quarter reports show that credit has improved at most banks with progress in reducing troubled assets.

Both Frank Hierro, Mahoning Valley regional president for Huntington National Bank, and John S. Gulas, president and chief executive at Farmers National Bank, both credited shale-gas activity with creating new opportunities to attract customers receiving bonus and royalty payments from leases. Those customers, according to both men, played a small part in helping both banks to increase their deposits and market share in the 12 months ending June 30.

“The county driving a lot of gains in market share was Columbiana,” Hierro said. “We saw a bigger increase percentagewise in Columbiana than Mahoning or Trumbull. I would say it’s just the beginning of the shale play reflected in these deposit numbers.”

On the other hand, it seems consumer sentiment peaked in September driven by more than the economic activity generated by the oil and gas industry.

“We don’t know if it’s oil and gas, automobile sales or retail sales,” said John Goempel, chief deputy auditor in Columbiana County. “All we know is people are spending more.”

PNC economist Mekael Teshome said consumers have made strides in paying down debt and growing savings accounts.

But bank officials agree that demand for loans remains on the low side as consumers grapple with their immediate debts. That has left businesses in the region as the leading borrowers, but much of that money is going toward capital improvements rather than major investments in the work force.

Auto sales

Much has been made of the auto-industry bailout, and there has been good local news with the national sales of the Lordstown-built Chevrolet Cruze and plans for General Motors to build the next-generation Cruze here.

New-car sales in the Mahoning Valley, however, continue to lag behind the numbers generated before the recession.

In August 2007, Valley dealers sold 2,755 new cars. In August 2012, that figure was down to 2,333.

Car sales, however, do appear to be recovering from 2010 — the lowest sales year — when just 2,038 cars were sold in August.


Comments

1IslandMike(757 comments)posted 2 years ago

Yep, Obama has been in office for FOUR YEARS and all the economic numbers have improved with the exception of the national debt. The debt went up due to the Bush tax cuts are what got us into the mess in the first palce. Well, along with the Invasion of Iraq and the war in Afghanistan.

GM is ALIVE! !Bin Laden is DEAD!!
The US is OUT of IRAQ!!
Unemployment is DOWN!!
The stock market is UP!!
The CRUZE is #1!!

THANK YOU PRESIDENT OBAMA!!

Suggest removal:

2chuck_carney(499 comments)posted 2 years ago

For the non-GM family; take home pay is down, while inflation is rising.

23-plus million Americans either unemployed or underemployed.

The US dollar is losing value, causing an increase in the price gas at the pump; gas has doubled in the las four years.

Healthcare premiums are up despite timmie ryan's assertion that the Affordable Care Act will "bend the cost curve downward.'

The utter failure of the government-backed solar energy companies such as Solyndra.

U.S soldiers still continue getting killed in Afghanistan. Foreign countries despise the US.

The picture is not so rosy durung the Obama regime

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3Ytownnative(1046 comments)posted 2 years ago

Obama forced GM into bankruptcy so the government could own it

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4Eagleman1969(9 comments)posted 2 years ago

A President, like a doctor, should first do no harm!

We have $16+ TRILLION in national debt. $6 Trillion of it in Bam Bam's single term, which is more than all 42 Presidents from George Washington thru Bill Clinton.

G. W. Bush added $4+ but only after revamping the nation's voting machines, 9-11, defending Americans both in the Homeland and world wide, fighting back where necessary, Hurricane Katrina, rebuilding New York, the housing bubble bust HE FOUGHT AGAINST vs the Dem's trying to give homes to those hopelessly unable to repay (Barney Frank SWORE nothing was wrong with Fannie & Freddie Loans), etc. 2001 -2009 did see good rebounds in growth after 9-11.

NOW, Bin Laden's gang is back, spreading everywhere, the Mid East is ON FIRE where "the Muslim world was to love us just for electing Barry", the "oceans were to lower, the Earth heal", etc. Our kids will hardly be able to pay the INTEREST back on this debt should the rates rise, inflation is up, gasoline more than double, and most of this money was wasted on EXPENSIVE gimmicks of GREEN ENERGY to funnel cash back to his supporters.

Let's try a business man for a change, what do you say?

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5Ypboy(50 comments)posted 2 years ago

You fools keep voting for the democrats and it will continue to be a slow recovery.

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6redvert(2074 comments)posted 2 years ago

This area will never change, they have voted the same way for 50-60 years and look what it has accomplished, "when nothing changes, nothing changes"

"The armpit of Ohio"

I love looking at these campaign posters and seeing the two treasured words at the bottom of the sure winners, "ENDORSED DEMOCRAT" I guess this means that the boss has spoken and the sheeple must obey!

Is it possible for someone not blessed to win a election in the "armpit" I did notice that this Hanni guy is not blessed even though his father was idolized following his passing sometime back.

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7DwightK(1263 comments)posted 2 years ago

It took a Republican to screw up the economy this badly so I don't know why we would for another one.

"Let's fight two wars and cut taxes at the same time" doesn't seem like sound financial advice.

Suggest removal:

8bunkpatrol(90 comments)posted 2 years ago

You cheerleaders for both "sides" are the real problem.

Different puppet, same hand.

Obey your corporate overlords.

Or demand real change. Tonight's debate is staged like a WWE event.

They've got you all under their thumb and all you can do is turn on each other while routing for "the lesser of two evils" like this is some friggin' high school football game. One gets paid to win, one to lose. They are paid by those with the most to lose if real necessary change were to occur.

Follow the money...

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9jojuggie(1288 comments)posted 2 years ago

The 1st 6 yrs of the Bush adm were great even though he inherited the Dot Com Bubble from Clinton. He also inherited 9-11, but then the last 2 yrs, of his adm Pelosi & Reid took over Congress & the Senate, and everything went downhill after that.

Oh Dwight, check this out - fiscal year 2007, from Oct1, 2006 to Sept 31, 2007 the US took in a record amt of income tax. Then because of the Dems, we started to go in the dumper.

The last 2 yrs of the Bush adm & the 1st 2 yrs of the Obama adm - that's 4 consecutive yrs, the Dems spent funds like a drunken sailor. That's not demeaning the Navy.

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10iBuck(223 comments)posted 2 years ago

Yep, Obummer has been in office for FOUR YEARS and all the economic numbers have improved with the exception of the national debt, and employment, and inflation, and employment, and production employee compensation, and duration of employment, and duration of unemployment, and unemployment insurance claims, and duration of employment (real full-time long-term employment vs. bodyshopping).

But other than that, everything is peachy.

Do you not see what created the recession? Yes, I saw the Community ReInvestment Act scam, and Chris Dodd, and Barney Frank, and Maxine Waters and Freddie Mac and Fannie Mae and FHA pushing for more mortgages for people who could not pay them off. And I see that they refused to allow that series of errors to be corrected so that the economy could recover.

I see the worsening of bodyshopping, and I see that the (both Reps and Dems) are trying to sustain and make worse the policies which encourage bodyshopping and discourage long-term employment of US citizens.

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11jojuggie(1288 comments)posted 2 years ago

YBR states "Wow you Republicans are stupid."

In the last 4 yrs:

Disability Enrollment + 17.6%
Medicaid Enrollment +19.3%
Food Stamp Rmrollment +65.2%

Those are really stupid numbers, HUH?

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12lee(544 comments)posted 2 years ago

Hay Bush busters don't forget that in his his last 2 years congress was controlled by the D's

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13Freeatlast(1991 comments)posted 2 years ago

9 for GOP/TEA
5 for the Americans

9 to 5
How is this a democrat area
OH that right they get to vote two times

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14jojuggie(1288 comments)posted 2 years ago

Uncommonsense, you make statements but you don't have any evidence to back up those statements.

Anyone can make a stupid statement. BACK IT UP MAN!

Suggest removal:


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