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Slowing National Employment Growth Not Sign of Imminent Recession; Ohio Employment Growth Robust

Employment growth has tapered off throughout the U.S.; however, there is no evidence to suggest a national recession in the near term, according to a recent study of state employment data. A few states have experienced declines in employment growth that are sufficient to suggest an increasing likelihood of some local recessions, most notably on the East Coast. At the same time, employment growth in Ohio has been relatively robust.

Writing in the Federal Reserve Bank of Cleveland’s Economic Commentary, economist Mark E. Schweitzer and senior research assistant Kristin M. Roberts say that, typically, a number of states exhibit slow employment growth before a recession begins. Only nine states had slow or negative employment growth last year. (The authors define slow jobs growth as a year over year percentage gain that is less than half of a state’s 15 year average growth rate.) Since 1951, the only recession when as few as nine states showed early weakness was that of 1973 75. In the mid 1980s, up to 16 states simultaneously had slow employment growth without the nation experiencing a recession.

According to Schweitzer and Roberts, employment in many states continues to grow vigorously, albeit at rates lower than at the beginning of 1995. In Ohio, for example, employment growth in 1995 was 238 percent of its 15 year growth rate.

The primary weak region is the Atlantic Coast, from Virginia to Connecticut. Schweitzer and Roberts say that dwindling federal employment in the Washington, D.C. area and hobbled defense related and financial services industries are the likely causes of the region’s soft employment situation. Since the region represents a substantial portion of the economy, its performance might color perceptions of the strength of the national economy.

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