Economist paints bleak picture for Toledo

10/2/2009

A senior economist with PNC Financial Services Group Inc. paints a stark picture of Toledo's current and future economy, predicting increased unemployment, a declining population, and falling home prices and household incomes for some time to come.

Craig Thomas, a Pittsburgh senior economist with PNC, uses harsh language in his Toledo market outlook released yesterday.

"A chronic underachiever, this market region has been hit particularly hard by the poor market for vehicles and the bankruptcies of GM and Chrysler," he wrote.

"The results are dramatic; our models project an unemployment rate over 14 percent in 2010. Toledo badly needs to identify new growth industries in order to pull out of the structural decline."

Lucas County's jobless rate in August was 12.4 percent and the city of Toledo's was 13.2 percent.

Mr. Thomas, who was not available to answer questions from The Blade, forecast little hope of a rebound in real estate values.

Toledo's declining housing prices "may not be unique in the country, but what is unique is the long-running underperformance of Toledo's housing market. Long-running job losses and declining population has greatly hampered demand in the region."

He projected no house price gains in 2010.

With no mention of the nationally recognized strides the region has made in alternative energy fields, Mr. Thomas blasts the region's industrial heritage.

"Toledo is suffering for overdependence on vehicle manufacturing and durable manufacturing in general. The loss of jobs in this industry has created what amounts to a hole in its economic bucket. Of course, this hole in the bucket will eventually cure what the overdependence on manufacturing that began this process, but Toledo still needs to identify the industries that will carry it forward," he wrote.

Another economist who studies the Toledo market, however, said that forecast may be overly pessimistic.

"What we know about virtually every metro area in Ohio is that they tend to underperform the national job growth averages," said Ken Mayland, an economist with Clearview Economics near Cleveland.

"I think the auto industry hit a bottom in the second quarter, both in terms of sales activity and the bankruptcies.

"But I'm hearing that things are gearing up, that parts suppliers are gearing back up," he said.

Contact Larry P. Vellequette at:

lvellequette@theblade.com

or 419-724-6091.