Regional economy continues to expand, but is facing some persistent headwinds, say Cleveland Fed researchers
Assessing the economic outlook for the region served by the Federal Reserve Bank of Cleveland -- Ohio, western Pennsylvania, eastern Kentucky, and the northern panhandle of West Virginia – Bank Senior Vice President Mark Schweitzer, Senior Economic Analyst Bob Sadowski, and Senior Research Analyst Chris Vecchio expect continued growth, albeit at a moderate pace, in the coming months.
Describing the outlook for the region as “mixed,” the researchers highlight trends in energy prices, steelmaking, and auto production:
- “The fall in energy prices has caused a significant slowdown in oil and gas exploration in the Marcellus and Utica Shales,” say the researchers. “While low energy prices result in higher discretionary income for consumers and wider margins for energy-intensive industries, they also contribute to widespread layoffs by exploration and production companies” and indirectly affect suppliers, restaurants, and other service providers. More positively, “anecdotal reports suggest ongoing investment, albeit at a modest pace, in midstream natural gas projects as well as the potential for construction of one or more ethane crackers, investments that could potentially support ongoing growth in the energy sector despite today’s low energy prices.”
- “The rising value of the dollar and the weakness in oil and gas exploration have affected key District industries, including steelmaking, though domestic market users of District manufacturing products, namely construction and transportation equipment, are doing better.” The researchers note that steelmaking still maintains a significant presence in the region: “Every state in our District has at least twice the typical employment share of primary metals workers” say Schweitzer, Sadowski, and Vecchio.
- “Nationally and regionally, consumers are increasing purchases of durable goods, particularly automobiles, as their circumstances and balance sheets improve,” say the researchers. Over the last several years, the region’s auto assembly plants have produced about 17 percent of the nation’s cars and light trucks.
Read Three Trends Influencing the Region’s Growth, in Forefront.
Speaking of our region, 2015 wasn't a banner year for employment gains in six of our major MSAs, though there was moderate growth. See how the numbers stack up for Cleveland, Cincinnati, Columbus, Lexington, Pittsburgh and Toledo, in Year in Review: Fourth District Labor Markets.
The new Northeast Ohio CyberConsortium, of which the Federal Reserve Bank of Cleveland is a founding member, is committed to helping companies better defend themselves against cyber-attacks through cross-sector information sharing. Find out more about the consortium, and a recent conference it hosted, in The Adversary Will Get In.
Federal Reserve Bank of Cleveland
The Federal Reserve Bank of Cleveland is one of 12 regional Reserve Banks that along with the Board of Governors in Washington DC comprise the Federal Reserve System. Part of the US central bank, the Cleveland Fed participates in the formulation of our nation’s monetary policy, supervises banking organizations, provides payment and other services to financial institutions and to the US Treasury, and performs many activities that support Federal Reserve operations System-wide. In addition, the Bank supports the well-being of communities across the Fourth Federal Reserve District through a wide array of research, outreach, and educational activities.
The Cleveland Fed, with branches in Cincinnati and Pittsburgh, serves an area that comprises Ohio, western Pennsylvania, eastern Kentucky, and the northern panhandle of West Virginia.
Doug Campbell, email@example.com, 513.455.4479