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Published: Friday, 9/2/2005

Ohio official: Economy has recovered

BY JIM PROVANCE
BLADE COLUMBUS BUREAU

COLUMBUS - Ohio's economy has recovered?

Lt. Gov. Bruce Johnson's declaration to that effect in a publication for corporate executives surprised Ohio AFL-CIO President Bill Burga.

"He must be going to different places than I've been going to," Mr. Burga said. "We're still seeing job losses. Wages are stagnant or going down. Poverty is going up, which was reported this week. I don't understand how he can say that. I don't think Ohio will recover for several years."

Mr. Johnson doubles as Ohio's director of development. In an interview for the latest edition of Area Development magazine, which focuses on corporate site selection and relocation, he said, "The trends are in the right direction. Ohio's economy has recovered."

Mr. Johnson stood by that statement yesterday.

"Real [gross state product] has sustained growth above where we were before the recession," he said. "Unemployment is back below 6 percent, which is the level most economists consider to be the full employment target ... We'll never be satisfied. We want a lot more wage and employment growth."

There have been encouraging signs. The gross state product grew by nearly 5 percent in 2004 to $418.3 billion, the fastest pace since it largely stagnated in 2001. Revenue from taxes on personal income and corporate profits has increased, and the state's unemployment rate dropped by half a percentage point last month.

But the state's unemployment rate of 5.7 percent in July was still above the national average of 5.0 percent. The rate was above Mr. Johnson's threshold of 6.0 percent as recently as June, when it was 6.2 percent.

A report this week from the U.S. Census Bureau showed 11.6 percent of Ohioans lived in poverty in 2004. And the same budget numbers that showed robust personal income and corporate profit growth also showed sluggish sales-tax collections.

"Recovered from what and for whom?" asked Mark Rosentraub, dean of the Maxine Goodman Levin College of Urban Affairs at Cleveland State University. "The whole country experienced a pretty substantial decline post-9/11. The economy of the nation went down and then rose. If you plotted Ohio against that, you'd see Ohio plunged deeper and is now rising too. It's above that plunge, but it's rising at a slower rate."

Ohio Chamber of Commerce spokesman Linda Woggon said that, while average Ohioans may not feel it yet in their pocketbooks, the turnaround is under way.

"Employment is starting to edge up a little bit," she said. "Investment in capital is starting to edge up ... These are the positive things we've been wanting to see as an indication the economy is turning around."

Mr. Johnson has been on the stump lately promoting a $2 billion "Jobs for Ohio" bond issue on the Nov. 8 ballot. The borrowing would fuel investment in high-tech research, local public works projects, and industrial site infrastructure development.

In his Area Development interview, he touted the state's recent overhaul of its tax system, which cuts personal income taxes 21 percent over five years and replaces two business taxes on profits and plant investment with a new tax on gross sales.

Contact Jim Provance at:

jprovance@theblade.com

or 614-221-0496.



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